MONEY matters

Strict financial regulations and a new commodity boom have turned “boring” Canada into an economic star. Many economists believe Canada’s “boring” financial system has much to do with its success. Due to much more conservative lending than American banks, and much tighter regulations, the banking system in Canada has made it through the Great Recession relatively unscathed.

The combination of commodity revenues and investors seeking safety in Canadian assets has caused the currency to take off. After falling as low as 77 cents to the U.S. Dollar during the recession, the Canadian Dollar, also known as the loonie, has now returned to rough parity with the greenback. If the loonie continues to rise, there could be problems on the horizon, especially where exports are concerned, but for now, the economic outlook is very bright. (more…)

"I am reluctant to sell China short, not because I think it has no problems or corruption or bubbles, but because I think it has all those problems in spades — and some will blow up along the way (the most dangerous being pollution). But it also has a political class focused on addressing its real problems, as well as a mountain of savings with which to do so (unlike us)."

Read Thomas Friedman's new op-ed this morning in the New York Times that asks the provocative question; Is China The Next Enron?

I kid you not. This is the headline of an article in the New York Times web edition this morning. Add that with a similar story on China in this week’s edition of the Economist, and you start to get a sense of the amount of power and clout China now wields on the geopolitical stage.

Of course, much of this is political and economic posturing ahead of the G20 meeting. Yet it’s undeniable that China is beginning to flex its financial muscles. “China has the world’s largest foreign exchange reserves, valued at nearly $2 trillion, with more than half of those holdings estimated to be made up of United States Treasuries and other dollar-denominated bonds”.