Market Overview

Go North, Young Man!

Might young Americans begin to look north in order to avoid financial and societal tumult?

Young Americans could always look to Canada. MarketWatch's Bill Mann recently had an interesting article on the topic of Canada's economic health. According to Mann, the release of two major reports shows that "Canadians' personal wealth outstrips Americans' for the first time." Mann: "By US standards -- income data -- Canada, the land of no bank failures or housing debacles, is better off these days."

Mann argued that Canada's quality of life has been higher those in the US for some time time. Even aside from questions about standard of living, according to IMF estimates, Canada's gross domestic product per capita for 2011 was higher the US in GDP per capita. Mann discussed how a recently released report from Statistics Canada evaluating economic data from the first quarter of 1997 to the first quarter of 2011 shows that "Canada's living standards improved 5% relative to the US."

Furthermore, "[b]ased on real [gross national income] per capita. Canada's living standards improved 12 percent compared" to the US. Mann suggested that given Canada's robust labor productivity and ability to trade internationally, our neighbors north of the border appear to be better off. While the reasons why Canada's economy appears to be doing better than ours may be complex, could the US soon see more Americans moving to a better life up north in Canada?

I recently discussed a Zero Hedge story written by Ben Tanosborn regarding the various economic bubbles in America. On the topic of the higher education bubble, Tanosborn boldly asked, "Could it be that the United States is entering a brand new era when the discussion switches from 'illegal immigration' to 'brain-drain and American migration'? Will our best and brightest people find hope and refuge in other shores... those of Brazil, parts of Asia and new Liberia's in Africa?" Far from Brazil, China, or Liberia, Mann's article would seem to suggest that Canada is the place to go.

Given the prospects of political dysfunctionality, ideological polarization, societal unrest, consumeristic cultural clutter, and hard economic times in the US, it is not difficult to conceive that some Americans may be thinking about moving to Canada. Even so, one should not necessarily believe that the grass is necessarily greener north of the border. Canada does have an unemployment rate of 7.4 percent in comparison to 8.6 percent in the US. Nevertheless, those who may want to invest Canadian-style while not having to move can still take a look at CurrencyShares Canadian Dollar Trust (NYSE: FXC).

Aside from emigrating to Canada, young people in the US looking to move to a place with a better economy could look north in this country. North Dakota's economy has been booming recently and has the nation's lowest unemployment rate. A March 2011 article from USA Today discussed how North Dakota is experiencing economic prosperity with a soaring population owing to booming oil and agriculture. North Dakota currently has an unemployment rate of 3.4 percent, the lowest in the nation and far below the national rate. According to the USA Today article, North Dakota's "unemployment rate hasn't touched 5 percent since 1987."

Minnesota Public Radio recently discussed how, because of new wells, "a record amount of oil is flowing out of western North Dakota, and unprecedented money is flowing into the state [of North Dakota]." That being the case, North Dakota's "growth is causing severe strains in the state's economy" owing to high demand and a "serious shortage of workers". Owing to changes in economic status, "rapid growth has thrown the economy out of equilibrium". With this in mind, young people struggling to find their way amidst the national malaise may want to set their hopeful eyes on North Dakota in order to brave the storm -- but before you head up there, be sure to pack some warm, winter clothing.

Young struggling Americans not afraid of frigid temperatures could also set their sights on Alaska. According to a Jan. 5, 2012 article written by Pat Forgey for Juneau Empire, economic growth is expected to continue for the state of Alaska. From the article: "Even while the nation has been mired in a recession and its aftermath over the last several years, Alaska has mostly been adding jobs." Growth in Alaska can be attributed to key industries including oil, mining, and fishing.

According to Southeast Alaskan economist Mali Abrahamson, Southeast Alaska's growth in 2011 and projected gain in 2012 is because of "new government jobs in state and local agencies". With a declining population in the Southeast, "Abrahamson also warned of economic uncertainty ahead as aging workers retire and may not be replaced." This situation could provide opportunities for young Americans seeking meaningful employment. Where many young Americans turned off by consumeristic materialism and cultural clutter are simply looking for a meaningful job and a functional lifestyle, the northern route may be beneficial and worthwhile.

While various regions of the world like China or Brazil are highlighted as areas of economic growth, one cannot forget about the north. According to an October 2011 article from The Guardian written by John Vidal, melting ice in the Arctic is providing faster and more efficient cargo routes for Scandinavian supertankers. Vidal: "Supertankers and giant cargo ships could next year travel regularly between the Atlantic and Pacific Oceans via the Arctic to save time, money and emissions." Receding ice in the Arctic could be a blessing for shipowners as travel time and fuel costs are cut thanks to warmer temperatures. A faster route up north also has security implications as ships would be able to avoid Somali pirates, turmoil in the Middle East, and the Suez Canal thereby reducing security and insurance costs. With this in mind, traders may want to take a look at companies like Nordic American Tanker Shipping Ltd. (NYSE: NAT).

Despite financial problems in Europe, it would appear that the Nordic world has a lot going for it economically. While traders and investors may be worried about the future of the euro currency, Saxo Bank recently discussed in its 10 Outrageous Predictions for 2012 the prospect of Sweden and Norway replacing Switzerland as safe haven currencies. Saxo Bank: "Sweden and Norway sport excellent current account fundamentals, prudent social policies and skilled and flexible labour forces. Flows into the two countries' government bonds on safe haven appeal becomes popular enough to drive 10-year rates there to more than 100 basis points below the classic safe haven German Bunds." Traders who are looking to benefit from the Swedish krona as a possible safe haven currency may want to look at CurrencyShares Swedish Krona Trust (NYSE: FXS)

In the long-term, we can also not forget about Greenland. Those familiar with my articles should know that I am a fan of Greenland because of its culture, history, and political economy. Greenland also has its share of resources. According to Dubai's Khaleej Times, "[t]he world gets as much as eight per cent of its fresh water from Greenland." With the prospects of climate change and a global water crisis, I think there is a chance that Greenland (part of the Kingdom of Denmark with a population of only 57,670) could very well become a global economic hub in the future. Given opportunities for rare earth metals, rubies, gold, and oil and substantial room for population growth, the US and northern Europe may look more to Greenland and the rest of the Arctic as the region emerges as a strong investment opportunity. And even if young Americans may be wary of Greenland, Scandinavia, or Canada, there is always Alaska, the "great land" and "last frontier".

All in all, those hoping that the economy and perhaps their own financial well-being will start looking up may want to start looking north.

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