Failure is healthy.
That’s what you hear if you’re an executive, venture capitalist, or entrepreneur in Silicon Valley. Failure teaches smart people great lessons that will come in handy “next time.”
Maybe that’s what the Fed was thinking when it continually relaxed banking, mortgage, and financial services policies and rules. Maybe it’s what the cavaliers at Goldman Sachs and the myriad of failed banks in the U.S. thought. We’ll get a bailout if we fail, and we’ll “learn.”
With pride colored with a pinch of regret I have to applaud Canada: Not a single Canadian bank or trust has failed since the Economic Crisis began 3+ years ago; the Canadian dollar, having dipped sharply, is almost at parity again with the USD; and the Bank of Canada has signaled strongly that it may soon raise interest rates.
Canada is out of the Recession. Real estate is climbing, employment is up, and people are going to the mall.
So what’s the catch?
Here’s the rub:
Canada refuses (by policy) to let banks get too big to fail. It also highly regulates the banking industry–the Right hand actually knows what the Left hand is doing.
The downside is that Canada lacks “innovation” in the financial industries and maybe beyond. What it lacks in innovation, it acquires in un-failed banking institutions, low rates of home foreclosures, bankruptcies, and even business/banking scandals.
This is great news. And this is incredibly boring.
Can a country and its people “lead” with such an extremely regulated economy and accepting culture?
That said, can a country like the U.S. lead from its vantage point?
© 2009 John Dila