Canada Financial Economy

712 Words 3 Pages
This article discusses the contradictory role and place of finance in the post-1990 Canada economy. A central argument advanced is that the relationship between the real economy and finance economy(paper economy) has become increasingly more complicated and contradictory. Therefore, the distinction made between “real” and “financial” problems of the economy needs to be better qualified by taking into account the dynamics between the two.This article talks about the over development and over importance of the financial sector (the “paper economy”) relative to the real economy.
The idea that financial industry does not produce anything of a tangible value, but lubricates the growth and development of those parts of the economy which produce
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Rapid growth of the finance market was not matched with the equivalent growth of assets and investments.. The rising share prices had no effect o the real economy.
The conservative economists say that the reason the real economy ‘s growth is stunted because of the government regulations. The best thing for the government to do is to smply cut off the regulations.The author also talks about the great irony where canada’s growing stock pile of papaerwealth is the fact that Canada has not become any better off in terms of national worth.But interestingly, the net financial wealth in the household sectors have been rising.
The author also talk about “corporate veil” where he says that the wealth is in hands of only a concentreated few in the society. In my opinion,high interest rates also picked the pockets of businesses in the real economy. Almost all companies carry some form of debt to finance their investments. However, as interest rates skyrocket, the cost of carrying that debt or financing new debt rises substantially. The result is that more corporate income is channelled away from possible investments in the real economy toward the paper

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