Saturday, December 17, 2005

 

Canada Sitting On 'Financial Volcano'

The Gazette in Canada worries about the financial health down south. "Times are good in Canada, really good. Now watch out. This is the essence of a sobering new warning from chief economist Clement Gignac at the National Bank of Canada. Gignac paints a persuasive picture that 2006 could well be the year in which our luck runs out as years of accumulated financial excesses in the U.S. economy start to come unwound, beginning with the deflation of a housing bubble that may be stretched to its limit."

"Why worry? Because we happy Canadians are perched on top of what many economists, including Gignac, regard as a financial volcano: the increasingly stressed U.S. economy. If it blows, we can expect to be shaken badly. Gignac believes that 2006 is the year when the housing bubble will start to deflate. If this is abrupt, it could trigger a recession. More likely, he thinks, it will happen gradually and there will merely be a sharp economic slowdown."

"How sharp? U.S. economic growth from the end of this year through the end of 2006 will likely decelerate to 2.4 per cent from the past year's robust 3.7 per cent. The principal reason is that consumer spending growth will grind nearly to a halt, falling to the slowest rate in 15 years."

"Canada's overall growth will slow, too, even though the energy and commodity-driven economies of the West and the Maritimes should hold up well. The soft spot will be Ontario, which produces a larger percentage of North America's autos than any other locale, even Michigan. When consumers feel impoverished, the last thing they want to buy is a new car."

"Quebec will also be hurt, since it depends on exports to the U.S. and to Ontario. It will also feel it if a U.S. slowdown squeezes demand in other parts of the world, as it likely would."

Comments:
Ben! This blog have 0 comments very often. It is interesting show, where peoples minds are.
I think you can make me visit here more often if you start placing articles abot junior goldmining and uranium mining stocks.
Thanks to John Law (I think it was him) I have read essay that made me started investing in goldmining stocks. I think it is perfect time for doing this.
 
Mike,
Yeah, I should balance out my posting. There is so much HB news to cover right now. As the buble winds down I will devote more time to these other blog.

I will start looking at mining co. stories more, too. Thanks,
Ben
 
Well from my Canadian perspective, the article is correct. While our government finances are very well off. I believe we are currently the only G8 nation running a surplus. The economic sideswipe effect of the US economy coming off the rails is going to hurt us.

We've been actively pursuing other trading partners to lesson our dependancy on your money. Perhaps some of that will help, but when your trading partner of 80% goes into a tailspin, you are going to go with it. Not to mention when our own housing bubble runs it's course.

Anyway, I've slowly been shifting my RRSPs into Precious Metals/Commodities waiting for the next bubble to form there. Get in near the ground floor, ride the next bubble and try to not get caught up in the media and jumpship before it's too late. =)
 
I noticed some large volume at the very end of Friday on some of the gold stocks, but no headlines to explain it. Anyone have any insights?

Gold stock charts 12/16
 
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