We Can Stop Patting Ourselves on the Back

One of less endearing features as a country is our habit of looking south, feigning horror, and telling ourselves that no matter the problems here we are not that bad. A case in point is the economy.

We have been hearing for months that while our economy is experiencing a mild downturn (that is now over) we have not seen the cataclysm here that was seen in the U.S.. Unemployment rates are lower, housing prices steadier and our financial sector the apparent envy of the world.

Yet as the Economist noted toward the end of last week, Canada's manufacturing sector in Ontario, the heart of the Canadian economy, is in deep trouble. And it is about more than GM. As they note

Ontario’s problems go wider than cars. Recession has curbed demand for its minerals and forest products. Nortel, a telecoms firm that was once Canada’s leading high-tech company, recently entered bankruptcy. Bits of it are being sold off piecemeal. Two-thirds of the 370,000 jobs lost in Canada between October 2008 and June 2009 were in Ontario, most of them in manufacturing.

Ontario’s economy is still the biggest in Canada. But it is no longer the richest. Indeed Ontario is now classified as a have-not province, making it eligible for handouts from a federal fund to equalise public spending across the country. It has even been granted its own federally funded economic development agency.

And, according to uber-pessimist Garth Turner, our financial sector is again handing out zero down long term mortgages to people with little ability to pay, a practice that led to the EFF initiative in the last budget and a $65 billion dollar buyout of troubled mortgaged back asset from our supposedly sterling banks.

So while the recession may have ended with surprising quickness (if it has indeed ended) it leaves not only devastating damage to workers in its wake, but seems to already set the stage for the next one.