BBC economics editor, Stephanie Flanders, had a nice piece on her blog yesterday which she called “The Best Prepared Award”. Although full of the usual Canadian descriptors (she uses variants of boring several times) she does use most of her time to praise the Canadian banking system. She doesn’t ascribe who might be responsible for the fact that, as she puts it, “Canadians are coming out of this crisis in a league of their own.” We know it was because of the prudent measures the Rt. Hon. Paul Martin put in place during his successful tenure as Minister of Finance and then PM. He stood up to the banks that wanted more fiscal flexibility, including more mergers.
Here are some of the best bits:
Canada’s banks have not just had fewer bailouts than other countries. They’ve had none. Zero. Not a dime.
As the FT pointed out today, of the seven institutions in the world that still retain a triple-A Moody’s credit rating, two are Canadian banks. And as their competitors have tumbled, so they have ascended the global rankings: all five Canadian banks now rank in the world top 50.
Didn’t they pay a price for that boring banking – the distinct lack of securitisation and innovation? Well, it’s true, Canada didn’t have a nationwide house price bubble in the lead up to this crisis. And they didn’t have the same kind of rise in personal debt. That’s one reason the IMF used words like “resilient” and “well-placed” in its latest survey of the country’s prospects.
You can see the results of this rather old-style approach in Canada’s boringly consistent rate of growth. On average, between 2001 and 2007, its economy grew by 2.6%.
Across the ocean, the City was a hotbed of global financial innovation, and we were riding a heady stock market and housing boom on a sea of debt. The result? Average economic growth between 2001 and 2007 of, er, 2.6%.
I’m sure someone will write to tell me the blot on Canada’s economic record, the fatal policy error that will cause me to sheepishly revoke its award in a few days’ time. But I haven’t found it yet.
Its sober management of the public finances has even left it room for a decent-sized stimulus package for this year and next. Net debt last year was an irritating 22% of GDP.
And the most impressive thing of all about Canada’s position is that you are probably reading about it for the first time. Canadians are so sensible they even have the sense not to brag, in case things turn out badly for them after all.
If the UK had these vital statistics, by now the world would be sick of hearing about them. But on top of everything else, the Canadians have guarded against hubris as well.
Oh, our poor current PM, Mr. Harper. He has had to go against almost every neoconservative value he holds in order to manage the global economic crisis. He barely knows who he is anymore; but to add insult to injury he now has to listen to the rest of the world praise as “genius” the far-sighted policies of his hated foes – the Liberals. He railed against Mr. Martin’s moves to protect our banking system through regulation – telling anyone who would listen that we should be following the examples of our southern cousins and loosing the free market so that Canada could achieve it’s true potential and take its rightful place among the advanced nations of the world who had seen the light and unfettered their financial sectors.
Final humiliation for Harper – he’s a trained economist – and everything he spent his life believing in has evaporated in front of him – all while he has been in power. It just can’t be worse than this for him. Unless you take this into account as well.