Invest in Canada

There is growing consensus that a global economic recovery is in the making, albeit the pace will be tepid and restrained. Momentum should, however, build through 2010 and 2011.

The question we should start asking is, ‘What comes next?’ In part this will depend upon the skill and will of central bankers. They will need to withdraw their unprecedented monetary stimulus with surgical precision– not so quickly as to jeopardize recovery but not so slowly as to stoke the inflation fire.

But the world economy will still be a dangerous place. In the name of mitigating the downturn, the U. S. federal government will go from around a 40% debt-to-GDP ratio to 100% within a few years and many states are racking up large fiscal shortfalls as well. The United States will not likely deal with this exploding debt very well. They will find it difficult to cut spending or raise taxes sufficiently. Even if financial sector regulations are improved around the world, this type of imbalance could provoke the next economic cycle. And even if another crisis is avoided, the United States will be exporting to the world lower growth, a depreciating dollar and premiums on bond yields as the inexhaustible supply of debt floods the global markets.

More..