Democracy Soup

Making sense out of the world of politics

Canada in good shape debt wise, but worried about what might happen south of the border

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Canada has very little debt and deficit, and created more jobs in June than the United States despite having only 11% of the population. But the Harper government is seriously worried about what might happen if the U.S. defaults on its debt. For more, check out the link from CanadianCrossing.com.

Paul Simon once taught us that “one man’s ceiling is another man’s floor.” And the Canadian economy is worried about the potential damage to its floor after tomorrow.

If the United States does default on its debt by not extending the debt ceiling (get it, ceiling), the Canadian economy will suffer from the suffering of the American economy.

The two economies are tied together in many ways, like being each other’s largest trading partner. And the Harper government is understandably more than a little nervous about what might happen after August 2.

The Canadian dollar has been trading high, around the $1.06 mark versus the U.S. dollar, the highest levels in almost 4 years. And Moody’s has renewed Canada’s triple-A credit rating.

Today is a civic holiday in one form or another in the vast majority of the Canadian provinces and territories, so they will return to the potential financial impact on Tuesday.

Americans aren’t the only ones hoping the debt default is thwarted.

Editor’s note: At press time, a tentative agreement has been reached, but this didn’t detract from legitimate concern north of the border.

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