Canada is in trouble but its likely in the most stable fiscal situation when it comes to its government .
After lowering the debts over the last decade, after the crisis we likely will go to the same debt levels as before or maybe a bit more. Meaning we will not have to start making astronomical interest payments like the US will have to and Obama will have to stop raising hopes and significantly increase taxes.
The idea behind the massive debt being created to pull the US out of current economic turmoil (and mismanagement over many years) is that the GDP will overall significantly grow, and the monetary supply will face inflation (hopefully sustained inflation that is not too high) so that the debt load in the future will be a smaller percent (in ratio to the money supply) than it is today even though the actual debt number is higher. The problem is that governments need to avoid too much deficit so they have the ability to do what Obama is doing during times of crisis. A debt-ridden government cannot print the trillions and trillions of dollars the US would need to get out of the current crisis. Once this crisis is over I hope Obama's plans include taxing big money interests in Wall Street to pay for their created mistakes and get the government's books back in order so it could be eligible to spend the trillions again if necessary for a future crisis.
Monetary policy is too complicated to sum up in a small argument, but the US debt can be handled perfectly fine if the monetary supply grows, inflation is controlled and money becomes more available. If the percent of the government debt vs the overall money supply in the US system is less than the present going forward, the US will be fine.
The monetary system is a numbers game. Fractional reserve banking basically creates money out of thin air, and debt IS money. If the central bank of a given nation requires banks to only have 20% of a bankholder's deposits actually on availability, that means if you hold an account in the amount of $100,000, only $20,000 is technically required to be actively available to you.
So the bank takes its collective assets and will lend out the remainder. So if person B takes out an $80,000 loan, that's money the private bank just created out of thin air (from your account, since that money is supposed to be yours) and provided to another person, who then uses the money for their own purpose. And once the money is spent, it becomes a deposit at another account either at the same bank or another bank where the same thing happens.
Technically what happens when a bank begins to become insolvent is when the number of assets a given bank has dips below, say, 5% of deposits. During this crisis, I doubt many of the big American banks have had even 1-5% of their money actually available that is in people's accounts. In other words, money is just fiction on paper... Most people who don't understand economics are oblivious that in a "good" economy, banks usually never have more than 20-25% of money actually available to all of its deposit holders if they all came to the door asking for money that day, all at once. Its only a bad economy if they get to super low stats like 1% available to pay out, which is what happened to several major US banks in the past 6 months and why the FDIC and federal government had to come in and take over.
I wished more people understood how unstable our monetary system is, for those of us in the industrialized world to understand our "civilized" society.
When loans dry up, the money supply dries up exponentially, and crisis happens such as what is going on in the US right now.
Our modern economic system is only possible because of debt, and debt is money. If we all saved money and stopped getting loans, mortgages, and stopped charging on our credit cards the capitalist world economies would become MORE stale than the most stodgy communist state ever was. DEBT IS MONEY in capitalism. Amazingly few people realize this.
Disgusting to think about really, I wished I lived in an era where we weren't strapped with such an old world economic system. I'm not a communist, but I do wish for a day where we can replace this old style monetary system with an economic system that is fairer without the business cycles that create mass instability after mass booms. Hopefully it can be a scientifically proven system and occur without revolution or any other uncivilized methods of transition.
Capitalism, socialism, communism, fascism, mercantilism, feudalism... We need a new, modern "ism" to reinvent the world and put these old world ideas to rest. Capitalism is fatally flawed and its only been fixed by socializing banks (why US capitalism has to be saved by socialism and socializing major US institutions if capitalism is the best platform for the future is an interesting study). But we'll leave that to later generations to figure out, I suppose. It has been interesting watching the United States go from hyper-capitalism to social-capitalism or government-backed corporatism (or whatever you want to call this) in less than 2 years.
ANYWAY... So far as a new industry to fix our current economic state...
The world is going to need to create a new Energy Technology (ET) sector to move beyond that particular resource problem so we in the west can stop using oil from anywhere, including raping the oil sands of Alberta's natural beauty and turning it into toxic cesspools. Becoming energy independent and environmentally sustainable is the next "IT" since the information technology boom is what created the boom in the 90's for Japan (well, they were rather stagnant but did benefit, its really all of Asia that woke up in the 90's from Singapore to Taiwan to South Korea; each creating a dynamic new IT based economy) and the United States and Canada... and most western nations. The nations whose economies adjust and become energy independent based on new technology will become the new powerhouses, and its the new industry to follow for world stability on several levels: environmental stability, economic stability (the ET revolution will surpass the IT revolution in importance in our lifetimes), and security on terrorism and war probabilities.
BTW, China is the nation right now with the largest investments setting up for developing better electrical technologies from greener renewables to electric cars and infrastructure. Obama is introducing some good ideas south of the border. Harper is supporting Alberta oil while Ontario is facing a systemic economic shift that is going to be hard for everyone from Windsor to Brantford. Canada does need new leadership on the ET revolution if it wants to participate and be a part of it.
ET can help Ontario, and it can help Canada be a leader for the future. Focusing only on Alberta oil will contribute to the need of manufacturing workers migrating from Brantford, ON to Fort McMurray, AB. Rural Ontario needs to wake up and start supporting a solution, not supporting out-migration to other growing parts of Canada.
Toronto will remain the primary financial market to trade and fund the ET sector in Ontario and all of Canada. Toronto will remain the media centre to report about it. Toronto will remain what it is, but the whole does need to be healthy for Toronto to be healthy.
Windsor's manufacturing yin is Toronto's financial yang.
And for those who are partial to Alberta oil, yes Alberta oil is needed. But it doesn't need to be the focus of everything as oil will eventually (hopefully in my lifetime) become known as the old energy sector while factories appear in Oshawa and Windsor to create electric cars and fuel cell production, hydrogen refineries, solar panels, wind turbines, water turbines, geothermal, and other ET products.
