A Commodity Based Economy
Canadians have a history of being a resource based economy. When the world economy suffers, so does Canada. This has been true for as long as Canada has existed as a nation.
Attempts to Broaden our Economy
Previous governments have enacted all sorts of policies to attempt to diversify and strengthen our economy and to make us less dependent on the export of commodities. There were the efforts to establish trade with Europe because of our over-reliance on the USA. There was the Auto Pact. There was the Free Trade Agreement. There was the effort to reach out to the Far East. There was……… and so on.
These agreements did have an effect. We created an entire industry based on manufacturing autos. We established a movie production expertise. We established centers of technical advancement in Waterloo, Ontario and elsewhere. Most of all, we created some very large resource based companies.
We created a world-renowned stock market, which grew and grew and provided liquidity to these Canadian and to foreign companies.
What Happened to our Industries?
Then our own success defeated us. One by one, our large companies were taken over. Our resource companies of any size were bought by larger foreign companies. Our auto industry was decimated by the meltdown. Our pride and joy – Nortel – a Canadian Company – became a world leader, and then fell.
Worse than its fall, all of that wonderful advanced technology was bought up by foreign companies, with nary a word from our leaders. Give away Canadian assets and accomplishments, as if they were worthless.
Canada is the Exception to the Entire World
We are the only country in the entire world to let this happen. Yet our simplistic views of what capitalism is, lets us stand by and watch as every prized asset gets taken over by foreigners.
We have become a feeder of prized assets for the rest of the world. We look at our successful companies and are jealous of them. We don’t protect them. We are happy to see success flee our shores.
Now our world class stock market – unequalled worldwide – is about to flee Canada.
The TSX & the TSXV
The loss of all of these large companies hollowed out the TSX until it became a listing of primarily Canadian financial institutions (read the Banks), and junior resource companies, with a sprinkling of tech and bio companies. Things got so bad, that the senior exchange started accepted penny stocks as listings on the senior exchange. There was simply no choice. The exchange had to have some companies listed.
If the government stood passively by while all major companies were sold or gotten rid of through competition, either the exchange had to fold, or it had to accept penny stocks to the listings.
Our Banks – Our Uncaring Banks
Then our banks, one of few protected industries, used their power to further undermine the Stock Exchange. They created their own electronic exchange, separate and distinct from the TSX, and this took volume and business away. Trust our banks to care not a bit for Canada. They only buy up anything worth buying to prevent competition and to enrich themselves. But retail investors don’t use this ‘bank exchange’ – only institutions. More about banks in some detail another time.
Because banks have so much political influence, they are allowed almost a free hand, with the only restriction being they are not being allowed to all merge together. At least our governments have that much common sense.
How the TSX Became Powerful and World-Class Valuable
In my next blog, I will detail how the TSX strengthened itself, and how it became the most important exchange in the world for investors and for resource based stocks.
I will also detail the transaction whereby we are about to give away our prosperity, with only a few minor safeguards which attempt to put a pretty face on a very transparent give away of our most necessary asset, an asset that brings people from around the world to Canada.
And a transaction, that will decimate our economy as all companies transition over the next four years to the LSE in London, UK, and the TSX becomes irrelevant.
In essence, the LSE is buying the listings of future companies and becoming the only place to invest. Canada will be left in dust, except for a few happy shareholders of the former TSX.
More history and details coming
