The 2008 financial meltdown helped transform a cyclical recession into the deepest economic slowdown since the Great Depression of the 1930’s. The continuing housing crisis, the sustained high levels of unemployment, rising deficits and debts, world events affecting the economy in Japan, and the sovereign debt problems in the EU have contributed to making growth slower and less certain than other post-recession cycles.
We have witnessed how this economic picture has affected the political climate in the U.S. as it is about to embark on the next presidential cycle. The Tea Party has been a new phenomenon for the right and it has come to dominate the Republican Party. It has also had an impact on both the conduct of congressional business, and possibly on the GOP nomination process. Just recently, a new development from the political left has found expression with the “Occupy Wall Street” movement of the last four weeks. It remains to be seen what its social and political impact will be.
It is clear the U.S. is hurting and the worst delusion for the rest of us is to believe that the situation will be limited and contained to its borders. It won’t. This is why efforts by France and Germany to work together in a more audacious manner to deal with the European difficulties have to be welcomed. Actions on the job front in the U.S. must be encouraged. Continued efforts by the world central bankers, world financial regulators and political leaders to deal with policies aimed at preventing a repetition of the last financial meltdown are necessary.
Québec as a federated state has jurisdiction over how financial transactions take place and financial markets interact. The province also works closely with federal financial institutions to make sure that investors have the knowledge and the protections to guarantee the security of their investments. It has to be aware of what other jurisdictions are doing because investments are not limited by borders.
This week Québec’s Minister for Finance Alain Paquet conducted a mission to meet with key financial regulators at the federal and state level. The goal is to better appreciate steps taken since the 2008 financial debacle and the recent passage of the Dodd-Frank legislation (2010). Such inter-jurisdictional collaboration is key to learn from other’s best practices and errors.
Canada did come out of the meltdown in a strong position because of how we chose to regulate our banks and commercial institutions. This being said, because financial insecurity has no borders, it remains essential that policy makers from around the world maintain the dialogue and the contacts on how to prevent a repetition of what happened.