Spending Us Over the Brink

Canadians have been lulled into the believing that the traditional conservatism of our chartered banks has insulated us from the economic chaos that has infected the U.S. and major parts of Europe.   Fundamentally, overextended national accounts on both continents have clouded the futures of Greece, Italy and Spain.  Their position threatens the global picture.

While it's true that Canada weathered the 2008 collapse in the U.S., our own credit culture is weaker than many imagine.  Now Statistics Canada is reporting that the ratio of household debt to income is nearing an astonishing 150 per cent.  Of course this might come as a surprise to consumers of  Statscan reports.  But it won't shock the thousands of middle-class Canadian families who are struggling to keep up with the payments on their credit accounts.

Much of that credit was accumulated while Canadians were surfing the wake of a healthy U.S. economy, fed in part by exports from America's biggest trading partner.  Now the U.S. is digging in its heels with Obama's new jobs program that could stifle cross-border trade and tip our economy in the direction of our neighbour's.

Until now Canadians have shown little sign that they are ready to enter into a dialogue about how to rebalance our accounts to restore our individual and collective fiscal sovereignty.  As long as we are willing to ride along on America's coat tails, we can expect similar results.  Mimicking their credit-driven consumer culture is going to catch up with us sooner or later.  At the rate it's happening, we're almost there.