• TSX +120.79 Canadian stocks surged on their first day of trading of 2010, led by positive economic news that drove commodity stocks higher and supported recovery hopes for 2010.
• DOW +155.91 Figures showing factories around the world cranked up production in December –the 5th month in row, were the main catalyst for the gains. The Institute for Supply Management's factory index rose to 55.9, its highest level since April 2006
• Dollar +.87c to 96.02cUS hitting a 2 month high as the price of crude oil rallied and global equity markets kicked off 2010 on an upbeat note, increasing demand for riskier assets.
• Oil +$2.15 to $81.51US per barrel. breaking the US$80 benchmark for the first time since November
• Gold +$22.50 to $1,117.70USD per ounce
One-hundredth of a percentage point. For example, the difference between 5.25% and 5.50% is 25 basis points.
Bear Market
A market in which stock prices are falling. The rule of thumb seems to be at least 20 percent. However, a lot depends on how long the drop lasts. The quicker the rebound, the less likely that investor psychology will turn from optimism to the pessimism that usually accompanies a bear market.
Bull Market
A market in which stock prices are rising for a length of time. Prices need not rise continuously. There can be days, weeks and even months in which prices fall. What matters is the long-term trend. When it comes to people, bullish describes one who is optimistic.
Dow Jones Industrial Average (DJIA)
There are thousands of investment indexes around the world for stocks, bonds, currencies and commodities however the DJIA is one of the best known and most widely quoted stock market averages in the media. It contains an average made up of 30 actively traded blue chip stocks spanning many different industries that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing.. The DJIA is calculated by adding the prices of each of the 30 stocks and dividing by a divisor. The average is quoted in points rather than dollars. It is price weighted, meaning that a $2 change in a $100 per share stock will have a greater affect than a $2 change in a $20 per share stock.
Gross Domestic Product
GDP is the value of all goods and services produced in Canada in a calendar year. The gross domestic product includes only final goods and services, not goods and services used to make another product. Changes in the gross domestic product are an indication of economic output.
Income Trust
Trusts structured to own debt and equity of an underlying entity, which carries on an active business, or has royalty revenues generated by the assets of an active business. By owning securities or assets of an underlying business, an income trust is structured to distribute cash flows, typically on a monthly basis, from those businesses to unit holders in a tax-efficient manner. The trust structure is typically utilized by mature, stable, sustainable, cash-generating businesses that require a limited amount of maintenance capital expenditures. An income trust is an exchange-traded equity investment that is similar to a common share
Index or stock price index
A statistical measure of the state of the stock market, based on the performance of stocks. Examples include the S&P/TSX Composite Index
Recession
Two consecutive quarters of contraction in the gross domestic product
TSX Composite Index
Comprises the majority of market capitalization for Canadian-based, Toronto Stock Exchange listed companies. It is the leading benchmark used to measure the price performance of the broad, Canadian, senior equity market. It was formerly known as the TSE 300 Composite Index
Tuesday, January 5, 2010
Monday, January 4, 2010
Financial Update For Jan. 4, 2010
Welcome to 2010!
• TSX +28.65 as the TSX wound up 2009 trading with its biggest annual gain in three decades. A rally that has run practically non-stop since March took the TSX up about 31 per cent for 2009, its best one-year gain since growing by more than 38 per cent in 1979. The main index is up a stunning 54 per cent from the lows of early March, when investors feared the global financial system was on the verge of collapse.
• DOW +120.46
• Dollar +.39c to 95.15cUS those who predicted the loonie would reach parity with the U.S. greenback by year’s end are forced to wait a little longer.
• Oil +$.08 to $79.36US per barrel.
• Gold +$3.70 to $1,095.20USD per ounce
Bernanke says regulation is first defence against bubbles BY JEANNINE AVERSA
WASHINGTON — Stronger regulation is the best way to prevent financial speculation from getting out of hand and throwing the U.S. economy into a new crisis, Federal Reserve Chairman Ben Bernanke said Sunday.
But he didn’t rule out higher interest rates to stop new speculative investment bubbles from forming.
The Fed chief’s remarks were his most extensive on the subject since the housing market’s tumble led to the gravest financial crisis since the Second World War — and perhaps the worst in modern history, in his view.
Critics blame the Fed for feeding that speculative boom in housing by holding interest rates too low for too long after the 2001 recession.
But Bernanke, in a speech to the American Economic Association’s annual meeting in Atlanta, defended the central bank’s actions. Extra-low rates were needed to get the economy and job creation back to full throttle after the Sept. 11 attacks and accounting scandals that rocked Wall Street, he said.
He said the direct links were weak between super-low interest rates and the rapid rise in house prices that occurred at roughly the same time. The stance on interest rates during that period “does not appear to have been inappropriate,” he said.
Still, the enormous economic damage from the housing bust — the longest and deepest recession since the 1930s and double-digit unemployment — shows how important it is to guard against a repeat, Bernanke said.
“All efforts should be made to strengthen our regulatory system to prevent a recurrence of the crisis, and to cushion the effects if another crisis occurs,” he said.
“However, if adequate reforms are not made, or if they are made but prove insufficient to prevent dangerous buildups of financial risks, we must remain open to using monetary policy as a supplementary tool,” Bernanke added.
Speculative excesses are not easy to pinpoint in their early stages, he said, and using higher interest rates to combat them can hurt the economy.
For instance, rate increases in 2003 and 2004 to constrain the housing bubble could have “seriously weakened” the economy just when a recovery from the 2001 recession was starting, Bernanke said.
To help the country emerge from that recession, the Fed under then-chair Alan Greenspan cut its key bank lending rate from 6.5 per cent in late 2000 to 1 per cent in June 2003. It held rates at what was then a record low for a year. It’s this action that critics blame for feeding the housing speculation.
Bernanke, however, said the expansion of complex mortgage products and the belief that housing prices would keep rising were the keys to inflating the housing bubble. As a result, lenders made home loans to people that they couldn’t afford.
The Fed in 2005 did crack down on dubious mortgage practices and the type of mortgages blamed for the crisis. He acknowledged that these efforts “came too late or were insufficient to stop the decline in underwriting standards and effectively constrain the housing bubble.”
Still, Bernanke said the lesson learned from the crisis isn’t that regulation is ineffective but that regulation “must be better and smarter.”
However, the Fed’s regulatory lapses and its failure to spot problems leading up to the crisis have spurred efforts in Congress to rein in the Fed’s powers and subject it to more oversight. Bernanke, who has been tapped by President Barack Obama to a second term as Fed chief, faces a contentious confirmation in the Senate.
When the Fed meets later this month, it is expected to keep its key bank lending rate at a record low, near zero. The big question is whether the Fed will provide clues at that time about when it will need to start raising rates to prevent inflation from taking off.
Some analysts worry that the Fed, which has held rates at record lows since December 2008, could be fuelling a new speculative period and potentially a future economic crisis.
Looking back, Bernanke suggested the Fed might have underestimated the full force of the recession, which struck in December 2007. “It turns out the recession was worse than we thought at the time,” he said.
After four straight losing quarters, the economy finally grew from July through September last year. Much of that growth, though, came from government-supported spending on homes and cars. There’s concern about how vigorous the recovery will be once government supports are removed later this year.
• TSX +28.65 as the TSX wound up 2009 trading with its biggest annual gain in three decades. A rally that has run practically non-stop since March took the TSX up about 31 per cent for 2009, its best one-year gain since growing by more than 38 per cent in 1979. The main index is up a stunning 54 per cent from the lows of early March, when investors feared the global financial system was on the verge of collapse.
• DOW +120.46
• Dollar +.39c to 95.15cUS those who predicted the loonie would reach parity with the U.S. greenback by year’s end are forced to wait a little longer.
• Oil +$.08 to $79.36US per barrel.
• Gold +$3.70 to $1,095.20USD per ounce
Bernanke says regulation is first defence against bubbles BY JEANNINE AVERSA
WASHINGTON — Stronger regulation is the best way to prevent financial speculation from getting out of hand and throwing the U.S. economy into a new crisis, Federal Reserve Chairman Ben Bernanke said Sunday.
But he didn’t rule out higher interest rates to stop new speculative investment bubbles from forming.
The Fed chief’s remarks were his most extensive on the subject since the housing market’s tumble led to the gravest financial crisis since the Second World War — and perhaps the worst in modern history, in his view.
Critics blame the Fed for feeding that speculative boom in housing by holding interest rates too low for too long after the 2001 recession.
But Bernanke, in a speech to the American Economic Association’s annual meeting in Atlanta, defended the central bank’s actions. Extra-low rates were needed to get the economy and job creation back to full throttle after the Sept. 11 attacks and accounting scandals that rocked Wall Street, he said.
He said the direct links were weak between super-low interest rates and the rapid rise in house prices that occurred at roughly the same time. The stance on interest rates during that period “does not appear to have been inappropriate,” he said.
Still, the enormous economic damage from the housing bust — the longest and deepest recession since the 1930s and double-digit unemployment — shows how important it is to guard against a repeat, Bernanke said.
“All efforts should be made to strengthen our regulatory system to prevent a recurrence of the crisis, and to cushion the effects if another crisis occurs,” he said.
“However, if adequate reforms are not made, or if they are made but prove insufficient to prevent dangerous buildups of financial risks, we must remain open to using monetary policy as a supplementary tool,” Bernanke added.
Speculative excesses are not easy to pinpoint in their early stages, he said, and using higher interest rates to combat them can hurt the economy.
For instance, rate increases in 2003 and 2004 to constrain the housing bubble could have “seriously weakened” the economy just when a recovery from the 2001 recession was starting, Bernanke said.
To help the country emerge from that recession, the Fed under then-chair Alan Greenspan cut its key bank lending rate from 6.5 per cent in late 2000 to 1 per cent in June 2003. It held rates at what was then a record low for a year. It’s this action that critics blame for feeding the housing speculation.
Bernanke, however, said the expansion of complex mortgage products and the belief that housing prices would keep rising were the keys to inflating the housing bubble. As a result, lenders made home loans to people that they couldn’t afford.
The Fed in 2005 did crack down on dubious mortgage practices and the type of mortgages blamed for the crisis. He acknowledged that these efforts “came too late or were insufficient to stop the decline in underwriting standards and effectively constrain the housing bubble.”
Still, Bernanke said the lesson learned from the crisis isn’t that regulation is ineffective but that regulation “must be better and smarter.”
However, the Fed’s regulatory lapses and its failure to spot problems leading up to the crisis have spurred efforts in Congress to rein in the Fed’s powers and subject it to more oversight. Bernanke, who has been tapped by President Barack Obama to a second term as Fed chief, faces a contentious confirmation in the Senate.
When the Fed meets later this month, it is expected to keep its key bank lending rate at a record low, near zero. The big question is whether the Fed will provide clues at that time about when it will need to start raising rates to prevent inflation from taking off.
Some analysts worry that the Fed, which has held rates at record lows since December 2008, could be fuelling a new speculative period and potentially a future economic crisis.
Looking back, Bernanke suggested the Fed might have underestimated the full force of the recession, which struck in December 2007. “It turns out the recession was worse than we thought at the time,” he said.
After four straight losing quarters, the economy finally grew from July through September last year. Much of that growth, though, came from government-supported spending on homes and cars. There’s concern about how vigorous the recovery will be once government supports are removed later this year.
Tuesday, December 29, 2009
Financial Update For Dec. 29, 2009
• TSX + last traded on December 24 and volume is expected to be light through the three-day week as many market players are on holiday between Christmas and New Year's.
• DOW +24.63
• Dollar +. 94.53cUS The dollar held firm near a two-month high against the yen on the view that the U.S. economy is recovering well. Oil has often eased this year as the dollar firms, making crude more costly for holders of other currencies
• Oil -$.10 to $78.67US per barrel. Oil traded flat, off a five-week high the previous session, as a firming dollar offset colder U.S. weather and concerns over political developments in Iran.
• Gold -$9.40 to $1,086.00USD per ounce
Five things that should keep you awake at night about the unfolding economy JULIAN BELTRAME, THE CANADIAN PRESS
OTTAWA - Looking into the economic crystal ball, the vast majority of private sector and institution forecasts agree that the scary global recession of last year is past and that normal times are just around the corner.
It could still go horribly wrong.
Forecasters caution that the degree of uncertainty and doubt about their baseline forecasts - or most likely scenarios - has seldom been higher.
In fact, many, including the world's central bankers, say substantial risks lurk around that beckoning corner and some are serious enough to send the whole edifice of economic stability crumbling.
Bank of Canada governor Mark Carney refers to the economic landscape as filled with "significant fragilities" which encompass everything from steady growth going forward to a second recession.
"It's a pretty dangerous economy out there," agrees TD Bank's chief economist Don Drummond.
"This should be the easiest of times to do a forecast because you are at the bottom, so you know which direction you are going to go. But I do think there's almost an unparalleled degree of uncertainty out there."
First the baseline. No matter which source is consulted, from the Bank of Canada to the U.S. Federal Reserve, the International Monetary Fund or any number of private-sector forecasters, 2010 is the year Canadians, Americans and the world get their economic mojo back.
The recession ended some time in the second half of 2009, the logic goes, and with trillions of government money still being poured into global economies, growth in 2010 appears as certain as the sun rising in the east.
Growth rates vary from country to country, but the important thing is that they are all positive. In Canada, forecasts fall in the 2.5-per-cent to three-per-cent range - not a big rebound given that last year's slump knocked $30 billion off the economy's bottom line.
But those are baseline, most-likely forecasts. Things could also turn ugly again, economists caution.
"I'd say there's an about one in five chance of a double dip recession, or a hard W as we call it," said Nariman Behravesh, chief economist with one of the world largest forecasting firm, IHS Global Insight of Lexington, Mass.
What could go wrong? From interviews with a half-dozen economists from Canada and the U.S., here are the five most dangerous pitfalls:
-Inflation: It seems absurd to worry about inflation right now. Canada's is at one per cent and the Bank of Canada says it isn't worried about it reaching its target of two per cent for another year or two.
But the world's printing presses have been busy flooding financial markets with money, and governments have been spending like drunken sailors in an effort to keep the Great Recession from becoming the second Great Depression. It worked, with a cost.
"I don't see how we can increase the money supply the way we are increasing it and avoid inflation," says James Gillies, professor emeritus at York University's Schulich School of Business.
"I can see it happening everywhere around the world, and with heavy, heavy inflation, we'll see rapidly rising interest rates," he adds. Gillies believes that will bring the recovery to a grinding halt, possibly as early as the end of 2010.
Other economists also worry about inflation, but say it will take longer to exert itself. The end result is the same, however.
High inflation triggers a policy response from central banks in the form of high interest rates, which causes businesses to stop borrowing and consumers to stop buying. That's how the recessions of the early 1980s and 1990s started.
-Policy-makers get it wrong: The flip side to real inflation is that the fear of inflation will cause governments and central banks to stop stimulating the economy too soon.
The growth that currently exists in many economies, particularly those of the U.S. and Europe, is due to unprecedented levels of government spending, bank and industry bailouts, super-low interest rates and money market liquidity infusions.
Nobody knows for sure when the private sector economy will be ready to stand on its own two feet and how it will react when the public sector crutches are removed, as G20 leaders are already discussing.
"They can make a mistake on both sides. They can withdraw the stimulus too early and we get something like a double-dip... as soon as late next year," said Douglas Porter, deputy chief economist with the Bank of Montreal.
"The other side is they leave the stimulus too long and we end up with an inflation."
Drummond says deciding when to exit from stimulus will require almost "surgical precision."
The trouble is, governments and central banks have never attempted the surgery before, which is cold comfort to the patient.
-The United States economy suffers a repeat pratfall: America is going great guns now, but again that's based on temporary government largesse and the need to refill empty warehouses.
That doesn't mean anyone will buy the products once the inventories are replenished.
Scotiabank vice-president of economics Derek Holt says he believes the U.S. economy will slow to about two per cent growth in the latter half of next year, and if the inventory restock is too aggressive, a double-dip is not out of the question.
"What could happen is we go through a temporary growth spurt and then it's the Emperor has no clothes all over again and the consumer is exposed," Holt explained.
Behravesh also calls the U.S. consumer the biggest wild card for the next year or two. Households may come to the realization that the wealth hit they took when their home values collapsed is permanent, and continuing high unemployment may spook them into hibernation.
For Canada, a second collapse in U.S. consumption will devastate the export sector, the auto industry in particular, and derail the recovery, Holt said.
-Global imbalances: Buyer economies like the U.S. are transferring unsustainable amounts of wealth to seller economies like China, which become the world's pre-eminent creditors, until a reckoning comes and the indebted nations can no longer borrow.
The recession was supposed to help resolve the problem, and to some extent it has. U.S. exports have risen and imports have fallen, which is one reason Canada fell into a slump.
But the U.S. still imports way more than it exports, and Drummond says Washington's response to the recession has added a second front to the imbalance.
"Those global imbalances are worse now than they were before," he said. "The U.S. consumer did fall back, but the U.S. government more than filled the vacuum. U.S. debt is even higher than it was two years ago."
Many industrialized countries have mortgaged their futures. Japan's debt to gross domestic product now stands at 227 per cent; Italy at 120 per cent, the U.S. and the United Kingdom are at 94 per cent, Germany and France at 83 per cent.
-Financial market shock: The collapse of Wall Street investment house Lehman Brothers is credited, or blamed, for being the final straw that broke the global economy's back last September.
Nothing of that magnitude has occurred since, although Dubai World's surprise request for a standstill on payments of about US$50 billion briefly sent shivers through overseas stock markets in late November.
Dubai proved a false alarm. But Peter Morici, the former chief economist at the U.S. International Trade Commission, says there are enough ghosts in the closets of the U.S. financial sector to keep policy-makers awake at night.
"The banks are back to their old tricks, at any point in time the banks here can be counted on to cook up some kind of scheme that will collapse on them," he said.
One danger signal starting to emerge revolves around the troubled U.S. commercial real estate market, which could spark another round of losses for banks in 2010. Most economists, however, say it won't be as serious as the 2007 subprime mortgage meltdown in residential real estate, but financial institutions are also less able to withstand shocks now.
Most of the risks identified by economists would emerge, if they do, from beyond Canada's borders, particularly in the U.S., economists say. But that is also how the 2008-2009 recession happened, they point out.
"Canada's exposure to the U.S. economy has diminished a little bit from what it was in the past, but you guys will still get clobbered if we go down the tubes," noted Behravesh.
• DOW +24.63
• Dollar +. 94.53cUS The dollar held firm near a two-month high against the yen on the view that the U.S. economy is recovering well. Oil has often eased this year as the dollar firms, making crude more costly for holders of other currencies
• Oil -$.10 to $78.67US per barrel. Oil traded flat, off a five-week high the previous session, as a firming dollar offset colder U.S. weather and concerns over political developments in Iran.
• Gold -$9.40 to $1,086.00USD per ounce
Five things that should keep you awake at night about the unfolding economy JULIAN BELTRAME, THE CANADIAN PRESS
OTTAWA - Looking into the economic crystal ball, the vast majority of private sector and institution forecasts agree that the scary global recession of last year is past and that normal times are just around the corner.
It could still go horribly wrong.
Forecasters caution that the degree of uncertainty and doubt about their baseline forecasts - or most likely scenarios - has seldom been higher.
In fact, many, including the world's central bankers, say substantial risks lurk around that beckoning corner and some are serious enough to send the whole edifice of economic stability crumbling.
Bank of Canada governor Mark Carney refers to the economic landscape as filled with "significant fragilities" which encompass everything from steady growth going forward to a second recession.
"It's a pretty dangerous economy out there," agrees TD Bank's chief economist Don Drummond.
"This should be the easiest of times to do a forecast because you are at the bottom, so you know which direction you are going to go. But I do think there's almost an unparalleled degree of uncertainty out there."
First the baseline. No matter which source is consulted, from the Bank of Canada to the U.S. Federal Reserve, the International Monetary Fund or any number of private-sector forecasters, 2010 is the year Canadians, Americans and the world get their economic mojo back.
The recession ended some time in the second half of 2009, the logic goes, and with trillions of government money still being poured into global economies, growth in 2010 appears as certain as the sun rising in the east.
Growth rates vary from country to country, but the important thing is that they are all positive. In Canada, forecasts fall in the 2.5-per-cent to three-per-cent range - not a big rebound given that last year's slump knocked $30 billion off the economy's bottom line.
But those are baseline, most-likely forecasts. Things could also turn ugly again, economists caution.
"I'd say there's an about one in five chance of a double dip recession, or a hard W as we call it," said Nariman Behravesh, chief economist with one of the world largest forecasting firm, IHS Global Insight of Lexington, Mass.
What could go wrong? From interviews with a half-dozen economists from Canada and the U.S., here are the five most dangerous pitfalls:
-Inflation: It seems absurd to worry about inflation right now. Canada's is at one per cent and the Bank of Canada says it isn't worried about it reaching its target of two per cent for another year or two.
But the world's printing presses have been busy flooding financial markets with money, and governments have been spending like drunken sailors in an effort to keep the Great Recession from becoming the second Great Depression. It worked, with a cost.
"I don't see how we can increase the money supply the way we are increasing it and avoid inflation," says James Gillies, professor emeritus at York University's Schulich School of Business.
"I can see it happening everywhere around the world, and with heavy, heavy inflation, we'll see rapidly rising interest rates," he adds. Gillies believes that will bring the recovery to a grinding halt, possibly as early as the end of 2010.
Other economists also worry about inflation, but say it will take longer to exert itself. The end result is the same, however.
High inflation triggers a policy response from central banks in the form of high interest rates, which causes businesses to stop borrowing and consumers to stop buying. That's how the recessions of the early 1980s and 1990s started.
-Policy-makers get it wrong: The flip side to real inflation is that the fear of inflation will cause governments and central banks to stop stimulating the economy too soon.
The growth that currently exists in many economies, particularly those of the U.S. and Europe, is due to unprecedented levels of government spending, bank and industry bailouts, super-low interest rates and money market liquidity infusions.
Nobody knows for sure when the private sector economy will be ready to stand on its own two feet and how it will react when the public sector crutches are removed, as G20 leaders are already discussing.
"They can make a mistake on both sides. They can withdraw the stimulus too early and we get something like a double-dip... as soon as late next year," said Douglas Porter, deputy chief economist with the Bank of Montreal.
"The other side is they leave the stimulus too long and we end up with an inflation."
Drummond says deciding when to exit from stimulus will require almost "surgical precision."
The trouble is, governments and central banks have never attempted the surgery before, which is cold comfort to the patient.
-The United States economy suffers a repeat pratfall: America is going great guns now, but again that's based on temporary government largesse and the need to refill empty warehouses.
That doesn't mean anyone will buy the products once the inventories are replenished.
Scotiabank vice-president of economics Derek Holt says he believes the U.S. economy will slow to about two per cent growth in the latter half of next year, and if the inventory restock is too aggressive, a double-dip is not out of the question.
"What could happen is we go through a temporary growth spurt and then it's the Emperor has no clothes all over again and the consumer is exposed," Holt explained.
Behravesh also calls the U.S. consumer the biggest wild card for the next year or two. Households may come to the realization that the wealth hit they took when their home values collapsed is permanent, and continuing high unemployment may spook them into hibernation.
For Canada, a second collapse in U.S. consumption will devastate the export sector, the auto industry in particular, and derail the recovery, Holt said.
-Global imbalances: Buyer economies like the U.S. are transferring unsustainable amounts of wealth to seller economies like China, which become the world's pre-eminent creditors, until a reckoning comes and the indebted nations can no longer borrow.
The recession was supposed to help resolve the problem, and to some extent it has. U.S. exports have risen and imports have fallen, which is one reason Canada fell into a slump.
But the U.S. still imports way more than it exports, and Drummond says Washington's response to the recession has added a second front to the imbalance.
"Those global imbalances are worse now than they were before," he said. "The U.S. consumer did fall back, but the U.S. government more than filled the vacuum. U.S. debt is even higher than it was two years ago."
Many industrialized countries have mortgaged their futures. Japan's debt to gross domestic product now stands at 227 per cent; Italy at 120 per cent, the U.S. and the United Kingdom are at 94 per cent, Germany and France at 83 per cent.
-Financial market shock: The collapse of Wall Street investment house Lehman Brothers is credited, or blamed, for being the final straw that broke the global economy's back last September.
Nothing of that magnitude has occurred since, although Dubai World's surprise request for a standstill on payments of about US$50 billion briefly sent shivers through overseas stock markets in late November.
Dubai proved a false alarm. But Peter Morici, the former chief economist at the U.S. International Trade Commission, says there are enough ghosts in the closets of the U.S. financial sector to keep policy-makers awake at night.
"The banks are back to their old tricks, at any point in time the banks here can be counted on to cook up some kind of scheme that will collapse on them," he said.
One danger signal starting to emerge revolves around the troubled U.S. commercial real estate market, which could spark another round of losses for banks in 2010. Most economists, however, say it won't be as serious as the 2007 subprime mortgage meltdown in residential real estate, but financial institutions are also less able to withstand shocks now.
Most of the risks identified by economists would emerge, if they do, from beyond Canada's borders, particularly in the U.S., economists say. But that is also how the 2008-2009 recession happened, they point out.
"Canada's exposure to the U.S. economy has diminished a little bit from what it was in the past, but you guys will still get clobbered if we go down the tubes," noted Behravesh.
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