Paul Krugman remarks below could easily apply to Canada, for it is essentially homeowners with their massively extended debt load who have bumped our debt to GDP ratio up to 203%, and we too require expansionary fiscal and monetary policies to support the Canadian economy. We won't be getting them from Flaherty or Carney, of course, the latter linked, after all, to the vampire squib in NYC and the former a devotee of pathological austerity. I fear all three jurisdictions slowly but inevitably slipping down the pot-holed road of recession towards the sink hole of depression.
"The combination of austerity-for-all and a central bank morbidly obsessed with inflation makes it essentially impossible for indebted countries [in the EU] to escape from their debt trap and is, therefore, a recipe for widespread debt defaults, bank runs and general financial collapse.
... In America, as in Europe, the economy is being dragged down by troubled debtors — in our case, mainly homeowners. And here, too, we desperately need expansionary fiscal and monetary policies to support the economy as these debtors struggle back to financial health. Yet, as in Europe, public discourse is dominated by deficit scolds and inflation obsessives."
Elsewhere, Krugman says that "Europe’s march toward a common currency was, from the beginning, a dubious project on any objective economic analysis" - one doomed to failure. As I've suggested more than once, the process will be slow, but potentially this could happen over that dragged out process: If Europe goes, the U.S. goes, and if the U.S. goes, Canada goes.