15 July 2010

Canadian Dynamos

Just a comment on Canada and economics. The Government of Ireland found out what happens when you run a country like a company. For Ireland it gave fabulous wealth. In the 80s nobody would have believed Ireland could have become one of the wealthiest most successful economies in the world, but it did.

It is unclear how much the EU had to do with it, it seems more like a consequence of the incredibly close relationship with the US and the fact Irish government ran it like a good company.

This is what I mean by a good company, that quality which enables growth to and beyond inherent potential. Again some complex dynamics are at work, and this is what I as talking about in terms of the US itself. So where does Canada fit into all this. Well, the Government of Canada has been quietly running this country like a business.

When the crisis happened I felt Canada would be relatively fine for this reason: oil had to spike up again, it was totally undervalued, and this would pull funds into Canadian assets. But there is something more the Ireland effect, perhaps. Because the protection Canada had from what happened south of the border is more than about oil or bank rules.

There seems to be something of that dynamic being released in Canada, what Mark Carney talked about in terms of fortune favoring the bold maybe. This, in the case of both Canada and Ireland is not a commentary on social policies. My hope for the US, is Obama will do the same kind of thing, at least try and balance the budget. Sound fiscal policies have such a profound effect of the dynamics of an economy.

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