Money Matters

Canadians have begun to cut back on their borrowing and make a start on reducing the personal debt that they had begun to accumulate as lending rates dropped -- but there are still dark clouds on the economic horizon.

The Bank of Canada continues to warn that the debt crisis in Europe is escalating quickly and Canada's economy is coming under increasing stress, which will be passed along to those of us still carrying large debts.

The Canadian Press has the sobering details:

OTTAWA -- Global financial conditions stemming from the debt crisis in Europe are deteriorating rapidly, placing Canada's economy under greater stress and Canadians with large debts at greater risk, warns the Bank of Canada.

The central bank's semi-annual financial stability review says bluntly that Canadians need to start worrying about the worsening debt mess in Europe, and its ability to hit home hard.

Chief economists at five of Canada's biggest banks had faint praise Tuesday for Ottawa's insistence that eliminating the deficit is the party's top priority.

As they met to brief the Conservative caucus in Ottawa, they applauded the effort -- but warned that Ottawa should be ready to reverse course if the economy collapses.

The meeting was jammed. And private.

But sources say the economists told the caucus they were worried about the possible fallout from European debt woes.

"We are dealing with an uneven, uncertain and underwhelming recovery,'' is how the Royal Bank's Craig Wright summed up the situation.

The message to the government? Stay the course' -- but be ready to return to appropriate stimulus spending if the global economy dives into a second recession.

"There's not a country on Earth that wouldn't want to trade places with us," US President Barack Obama said in his weekly weekly radio address on Saturday. 

Actually, there probably are -- about 10 countries, according to investment news website 24/7 Wall St.. Canada is one of them. In addition to its AAA economy, Canada is the most mineral and oil-rich country in North America, and recent gang violence notwithstanding, still has a "remarkably low crime rate".

The President's speech was mostly about his America's position as a world leading nation which boasts the "best universities, most creative entrepreneurs, and most dynamic businesses".

Still, when it comes to economy and living standards, critics would say that countries like Canada are not rushing to trade places with its neighbour any time soon. Here are the nine other nations picked by the website: 

Glenn Beck's investment tip to buy gold turned out to be eerily accurate following the stock crash on Monday: as U.S. stocks flounder, gold rose to a record high, and appears to be the most coveted commodity on the market today. 

Beck is actually a paid spokesperson for precious metals vendor Goldline, a fact which got him in trouble when critics claimed he was  misleading audiences by urging them to buy gold ahead of the market crash. Now, however, many people are thanking him for saving them with sound financial advice. 

Beck took a month from hawking gold for a few moments in May, as he jokingly told his Insider Extreme audience to ditch gold for the latest hottest economy.