Time to stop waiting for America's economic recovery: Don Pittis
Canada and the world must stop waiting for the U.S. to lead the way to growth
"Let's go," says Estragon in Samuel Beckett's play Waiting for Godot.
"We can't," replies his companion Vladimir.
"Why not?"
"Because we are waiting for Godot," said Vladimir.
Spoiler alert ahead. In the famous Beckett play, Godot never shows up.
The great American recovery is beginning to feel a bit like Godot. The rest of us are the waiting companions. Maybe Bank of Canada governor Stephen Poloz is Vladimir. He has been waiting as long as anyone.
"The good news," Poloz said in the speech he was supposed to deliver last October as gunman attacked Parliament Hill, "is that the U.S. economy is gaining traction, particularly in sectors that are beneficial to Canada's exports."
This week in his comments to Parliament's finance committee, Poloz was still waiting.
"The segments of non-energy exports that we expected to lead the recovery are doing so, and we expect this trend to be buttressed by stronger U.S. growth and the lower Canadian dollar," he told parliamentarians.
Failed boom
Yesterday there were new signs that the long awaited U.S. boom has failed to show up. Growth in the first three months of the year was expected to be a meager one percent. Instead it came in an even more miserable 0.2 percent.
Also yesterday Federal Reserve Chair Janet Yellen had her own Godot moment. Yellen has been repeatedly optimistic, anticipating the need for higher interest rates to keep growth in check. Her latest Fed statement is being widely read as gloomy, with an expectation that the U.S. central bank will push off interest rate hikes to the autumn.
Maybe it is time for Canada to stop waiting and do something of our own. We have every advantage.
Every place I go I see dynamic people doing interesting things. While the U.S. is divided into Manhattans and Baltimores, Silicon Valleys and L.A. slums, Canada remains much closer to a middle class society. We have a widely educated population with experts and languages from every part of the world.
While the U.S.may soon be dragged down by its overwhelming debt, despite a little exaggeration by Finance Minister Joe Oliver in his recent budget, Canada's national debt remains moderate.
Unfortunately our politicians are out of the mix just now, busy trying to bribe us with our own tax money. But that may not be so bad. Waiting for governments to do something for us is also a crutch.
There are many things we can do to make our economy a leader.
One is to stop focusing on real estate. Canada's banks are as guilty of this as anyone. A delay by Yellen in raising interest rates will give us a breathing space before mortgage rates begin to rise. Banks must use that reprieve wisely, getting back into the business of business investment instead of further pumping up Canada's overinflated property market.
More than talk
Our banking leaders must face up to the fact that over investing in a single asset class, especially one as unproductive as real estate, is not good for Canada's future. Surely they are also invested in Canada's future.
If banks fail to take the lead, governments must encourage alternative sources of lending, such as online and peer to peer lending, and set the banks aside. It is something Poloz once discussed in his Star Trek speech.
- Poloz seeks Star Trek inspiration after a bad week
- Canadian companies not prepared for new technology: Deloitte
Businesses everywhere in Canada must follow Deloitte's advice this week and start taking technological change seriously. While interest rates are so low this is an opportunity to get in front of radical changes in the way businesses will operate.
Finally governments everywhere should stop handing out freebies to voters and start serious investment in Canada's crumbling infrastructure. This could give us a significant advantage over our neighbours and trade partners while leading them on to greater mutual success.
Canada has everything it needs to build a strong economy.
"Let's go," says Estragon at the end of the play, though neither of the characters move as the curtain falls.
It is time to stop waiting for America. But it's got to be more than talk.
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