A little of what I see coming

Canada has intimate ties with United States. In fact 80% of our economy is based on US consumption. This means that whether we like it or not as goes the US so goes Canada.

This has huge implications. When Harper decides what to do with GHG he rightfully “dovetailed” his position to the US. It makes no sense to do anything else. When we choose a monetary policy we have to consider what the US is doing and “dovetail” our response accordingly. It’s not that we’re absolutely powerless or mere puppets, but we have to consider our circumstances and surroundings. This is why Canadians need to know what’s happening in the US and plan/project/prepare ahead.

The US is going through a “civil war”, not with guns and bullets but with political philosophy. The majority of US is right of center. When Congress was majority Republican they did not act so. The people rejected them and Democrats took over. Obama rose to prominence as a relatively unknown. He stood on two platforms that appealed to a lot of moderate republicans, “”balanced budget” and “accountability/transparency”. What is happening now (primarily from tea parties) is a huge rejection of government (41% prefer an independent approach). THESE NUMBERS ARE HUGE! Canada took over twenty years to get a grassroots with ¾ of that percentage (Preston Manning to Harper). Politically the US are activist and move much faster than Canadians. Therefore, having said all that what can I say about our future policy? Here are a couple of my conclusions:

There is a good chance Cap’n trade will die! The strong right movement in the States will overturn the EPA (along with “climate-gate”). The 2010 elections will move congress to a “stalemate” (at least). If Obama ends up being a one term President the EPA “promises” will be empty air. If the next president radically cuts government spending then monetarily the US will be dependant on perception of the treasury board strength (audit wise). They will have their currency devalued by 50-75% (or more depending on stability). Canada will have to follow because too much of our economy depends on them (Europe will try not to but probably will). Inflation and possibly hyper-inflation may be the worlds fate (short term minimum long term possibly).

Transportation will always be important. However, depending on what the US does, Canada’s shipping lanes will settle and plunge settle and plunge. The surge of instability will be reflected on the highway. It will bring opportunity and devastation, sometimes in the same day. Best advice is…. Get out of debt, stay out of debt! Don’t invest anything unless you can afford to write it all off.