The US bailout bill has now passed the House of Representatives and Bush has signed it, meaning that it has become law. What will that do to the US economy? I don't think one can expect the downward lurch of the economy to come to an end soon. 159,000 American jobs were lost in September, and job losses at a high rate will continue. More Americans will undoubtedly lose their homes to foreclosure, and many mortgage companies that have loaned money to people with bad or limited credit may go under. Financial stocks could also continue their declines because of mortgage defaults.
Credit will be difficult to come by. In buying up toxic assets, the American government will inject a considerable amount of cash into the economy, but this does not mean that financial houses will be as eager to make loans as they were before the sub-prime mess. Moreover, what credit they have to lend will build up slowly as the government carefully negotiates the price of the toxic financial assets it buys up. Even with the bailout, the US is probably in for slow times for several years. What might this mean for Canada, the largest single trading partner of the United States? Canada exports 30% of its gross domestic product and almost 70% of these exports go to the US. It is enormously dependent on the ability of Americans to keep buying and thus on the continuity of American jobs, income and credit. Automobiles and auto parts, a sector which has become highly integrated due to free trade, make up the largest part of traded products but Canada is also hugely dependent on the export of energy to the United States. Canadian commodities in general, including the lumber that went into building the houses being foreclosed, are a significant part of our exports. And the United States and Canada have substantial stakes in each other’s economy through foreign direct investment. Canada is the largest single country trading partner of the United States. In2006, total merchandise trade with Canada consisted of$303.4 billion in imports and$230.3 billion in exports. While Canada is an important trading partner for theUnited States, the United States is the dominant trade partner for Canada, and tradeis a dominant feature of the Canadian economy. Automobiles and auto parts, a sectorwhich has become highly integrated due to free trade, make up the largest sector oftraded products. Canada is also the largest exporter of energy to the United States.Like the United States, the Canadian economy is affected by the transformation ofChina into an economic superpower. The United States and Canada also havesignificant stakes in each other’s economy through foreign direct investmentCanada is the largest single country trading partner of the United States. In2006, total merchandise trade with Canada consisted of$303.4 billion in imports and$230.3 billion in exports. While Canada is an important trading partner for theUnited States, the United States is the dominant trade partner for Canada, and tradeis a dominant feature of the Canadian economy. Automobiles and auto parts, a sectorwhich has become highly integrated due to free trade, make up the largest sector oftraded products. Canada is also the largest exporter of energy to the United States.Like the United States, the Canadian economy is affected by the transformation ofChina into an economic superpower. The United States and Canada also havesignificant stakes in each other’s economy through foreign direct investmentCanada is the largest single country trading partner of the United States. In2006, total merchandise trade with Canada consisted of$303.4 billion in imports and$230.3 billion in exports. While Canada is an important trading partner for theUnited States, the United States is the dominant trade partner for Canada, and tradeis a dominant feature of the Canadian economy. Automobiles and auto parts, a sectorwhich has become highly integrated due to free trade, make up the largest sector oftraded products. Canada is also the largest exporter of energy to the United States.Like the United States, the Canadian economy is affected by the transformation ofChina into an economic superpower. The United States and Canada also havesignificant stakes in each other’s economy through foreign direct investmentCanada is the largest single country trading partner of the United States. In2006, total merchandise trade with Canada consisted of$303.4 billion in imports and$230.3 billion in exports. While Canada is an important trading partner for theUnited States, the United States is the dominant trade partner for Canada, and tradeis a dominant feature of the Canadian economy. Automobiles and auto parts, a sectorwhich has become highly integrated due to free trade, make up the largest sector oftraded products. Canada is also the largest exporter of energy to the United States.Like the United States, the Canadian economy is affected by the transformation ofChina into an economic superpower. The United States and Canada also havesignificant stakes in each other’s economy through foreign direct investmentCanada is the largest single country trading partner of the United States. In2006, total merchandise trade with Canada consisted of$303.4 billion in imports and$230.3 billion in exports. While Canada is an important trading partner for theUnited States, the United States is the dominant trade partner for Canada, and tradeis a dominant feature of the Canadian economy. Automobiles and auto parts, a sectorwhich has become highly integrated due to free trade, make up the largest sector oftraded products. Canada is also the largest exporter of energy to the United States.Like the United States, the Canadian economy is affected by the transformation ofChina into an economic superpower. The United States and Canada also havesignificant stakes in each other’s economy through foreign direct investment The gist of this message is "Canadians beware". While we should certainly feel sympathetic toward our American friends and neighbours as they slide into recession, we should fully recognize that we may be sliding along with them. Ed
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