I brought the kids to the pantomime this week and was amused that the most popular moments in the show still appears to be the times when the audience are all shouting the traditional warning to the hero of the danger posed by the pantomime villain lurking in the shadows. “He’s behind you’, the children all roar at the top of their voices, trying to make the hero fully aware of the looming catastrophe, which thankfully never happens. This seasonal standard can be dismissed as unoriginal and aimed at children, but for Canada this year it has a more than usual relevance.
The Canadian government is rightly proud of the fact that while the rest of the world struggles with economic disaster and systemic bank and sovereign debt, the good ship Maple Leaf has sailed serenely through the stormy waters of global recession without being pushed too far off course. Canadians need to beware of hubris, as this success may get increasingly difficult to maintain.
The number of immigrants coming from Europe is increasing as young, educated workers decide that Europe has no opportunities for them for the foreseeable future. The Canadian economy will benefit from this infusion of highly talented young people.
However, this is not the only thing that is coming out from Europe. Constant rumours and fears of the collapse of the Euro, or, at a minimum major sovereign defaults, are causing severe instability in the markets and it is not possible that Canada can remain unaffected by what is going on. The effects on global debt markets of a failure to resolve the current Euro crisis will hit all western economies and will cause some level of damage to their financial sectors.
As such, it behoves Ottawa to keep a close eye on the goings on in Europe and to intervene directly with ‘Merkozy’, as the new joint leadership entity of Angela Merkel and Nicholas Sarkozy is being referred to.
Ottawa should even now be drawing up plans to cope with the worst case scenarios of either a series of partial sovereign defaults from the Eurozone 17, a shrinking by expulsion of the number of countries participating in the single currency or a total collapse of the currency itself.
It may be that the Europeans will manage to pull the irons out of the fire at the last moment but we are still in for a very bumpy ride throughout 2012. At least our pantomime hero has the audience keeping him aware of the danger; Ottawa will have to maintain its own vigilance and remind themselves that even when they can see no danger looking to the front…it’s behind them!