Interest rates and mortgage rates are rising and the loonie is nearing parity with the U.S. buck. There is rehiring in the auto-sector. The price of oil is climbing.
We might be in a celebratory mood. The recession that Canada weathered better than most Western countries might officially be over. While this may be premature unemployment is still running at 8.2% and many in the manufacturing sector in Canada may have lost their traditional jobs foreverthings are certainly much better than they were a year ago.
But before we go and buy that new car, lets reconsider the next big threat on the horizon. Its not terrorism or the failure of a Canadian bank or the loss of a major manufacturing sector.
The greatest threat to Canadas prosperity is (yawn) U.S. financial reform.
Exciting, no. Important, yes. The world was sucked into a near-depression by Americas lack of a centralized monitoring authority in the fall of 2008. The crisis nearly dominoed the U.S. banking landscape after Lehman Brothers failed. A complete overhaulis clearly needed.
The Obama administration has proposed sweeping changes that would not only give the Federal Reserve more authority to regulate banks but would limit the credit cards rates, give shareholders more authority over companies boards and mandate home mortgages be tied to actual collateral.
Foremost among the proposals is monitoring the banks and financial institutions who deal in risky derivatives and hedges. Needless-to-say, U.S. banks made paper profits during the early part of the past decade by betting on assets that never really existed; given the current lack of regulation, this scenario will repeat itself with the same or worse consequences sooner or later. The next time around, Canada may not be as lucky.
Viewing the issue from the Great White RegulatedNorth makes this problem seem like a no-brainer but we are talking about the U.S. here, a country where the lack of gun control, overcrowded prisons, zealous capital punishment and the highest homicide rate in the western world, never seem to give anyone down there pause for thought.
Americans pride themselves on independence and having the Barack Obama Administration impose banking reform in the current political climate will seem like its hatching a plot sponsored in part by the International Communist Leagueand in part by al Qaeda.
Witness the fight for healthcare reform which has pushed the bounds of nastinessto a new level and you will see that Americans might prefer to secede from the republic rather than have a government body oversee their banking industry.
It will be another in a series of titanic battles for Obama but one that is crucial for the prosperity of his country and ours.