This Old Economist: “Dear God of Commerce, I beseech Thee...”

Bank of Canada Governor Mark Carney (soon to be a household name; let’s just call him Carney) seems to be praying for a miracle in the photo below.


["I beseech Thee, watch over our money...": Photo by Chris Wattie, June 23, Reuters]

I’m thinking the Canadian financial scene must be a bit shaky. What does Carney say?

“Although the Canadian financial system is currently on a sound footing, the bank judges that, largely because of external factors, risks to its stability remain elevated and have edged higher since December.” (June 23, London Free Press)

Allow this old economist to translate.

- “the Canadian financial system is currently on a sound footing” means we have our house in order when compared to a lot of other countries; of course, to say otherwise would cause panic in the streets, but...

- “the bank judges” means Carney and company

- “largely because of external factors” means it’s not his fault if the air starts to get heavy in close quarters

- “risks to its stability remain elevated” means we’re not going to hell in a hand-basket yet, but...

- “risks have edged higher since December” means the last six months haven’t been at all rosy and I’ll tell you more about that some other time

And what are the external factors affecting Canada’s so-called stability?

Carney mentions four things (largely external factors), i.e., the bailout in Greece, the deficit in the U.S., inflation in China, and the Canadian household debt of $1.5 trillion.

In my opinion, if Carney thinks the world scene is risky and elevated levels of household debt “require continued vigilance” (and some prayer?), then I say, reduce your spending, pay down debt, save money for tough times ahead.

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