Providing government support to aggregate demand is of obvious critical importance right now, but efforts to do so by spending money building schools, railways, hospitals, low-income housing, bridges and water mains has the added benefit of redressing decades of neglect by governments with other spending priorities.
The global financial crisis has made balance sheet strength fashionable again when it comes to evaluating companies. It’s what will allow those that have it to survive. Countries that entered this extraordinary period with sound finances are similarly positioned to weather it better and emerge from it stronger relative to not-so-prudent nations.
China announced a USD586 billion stimulus package Nov. 9, an amount equal to nearly a fifth of the country’s GDP. Global markets reacted with initial glee before turning negative in the face of discomforting economic news.
With the direction of the global economy still unclear, we’ve enlisted in-house experts to answer questions about the future of the energy sector, the Asian markets and, of course, Canada’s ability to bounce back.
Resource-intensive Canadian indexes posted their worst month in 10 years in October, the Standard & Poor’s/TSX Composite Index shedding 17 percent, the biggest monthly decline since August 1998.
Canada’s tighter regulatory system and more cautious approach to banking distinguish it from the US and the rest of the Anglo-Saxon financial system, but that doesn’t mean the crisis gripping the global economy won’t have a serious impact on its domestic economy. It’s important to understand that Canada entered this volatile period from a stronger position than other developed nations and that steps taken by its responsible authorities have been focused on mitigating the impact of external problems and maintaining competitive advantages its long-term conservative practices have made possible.
The point of a stimulus package is to deliver maximum bang on scarce bucks, as soon as possible. You want people who receive stimulus to spend the money in the real economy. There are choices, some better than others, but all subjective. In any case, it appears the Keynesian demand-side management policies that characterized the New Deal may be making a 21st century comeback.
The Bank of Canada (BoC) lowered its target overnight rate by 25 basis points to 2.25 percent Tuesday morning, citing severe strains on financial markets, a coming global recession triggered by an ongoing US recession and a sharp decline in commodity prices as its primary concerns going forward. The BoC is the first central bank to follow up the Oct. 8 coordinated rate cuts by global monetary authorities with another cut.
Canada elected another minority Conservative government yesterday, giving Stephen Harper another run in the top slot but denying him the mandate he’s angled for since his first win in January 2006.
Canadian Prime Minister Stephen Harper launched an early election campaign with dreams of a majority government dancing in his head. He also wanted to blunt the impact of a Democratic victory in November’s US election that would potentially boost liberal-leaning politicians across North America.
