How The U.S. Subprime Effects Canada

The Canadian economy has continued to prosper even as the U.S. economy struggles.  When it became apparent the extent of the U.S. subprime meltdown, many were concerned about what effect it would have on the Canadian economy.  Many Canadian banks and investors lost money because they had invested in U.S. subprime mortgages. The global credit market has tightened and lending requirements have become more stringent, however money is still available for good projects and qualified borrowers. The real effect on Canada is more of a Second Wave.  Many homeowners that weathered the subprime meltdown and were able to keep their homes have now lost their jobs because of economic slowdown and they end up loosing their home anyway. So just when people are seeing the light at the end of the tunnel with the last of the subprime mortgages clearing the market, the slow economy takes hold and people are forced out of their homes anyway, which further depresses the housing market.  This is where the U.S. economy really effects Canada.  Consumer confidence in the U.S. is way down.  Consumers aren't buying goods and services like they used to - many of these goods and services are from Canada. As a result Ontario, which has a huge manufacturing economy based on exporting goods to the U.S. is struggling. The lumber industry in Western Canada has slowed because the U.S. construction industry has slowed.  Tourism is down in Canada as U.S. consumers halt travel plans. When U.S. consumers stop buying it effects the entire global economy.