All major Canadian exports including energy, autos, agriculture, forest products and machinery-and-equipment collapsed in the latest report. Canadian analysts are shocked by the news.

I sure am not.

For my reason, look at happenings in China, a huge recession in Europe, and even a recession in the US that surprisingly few have even figured out yet.

The Globe and Mail reports Sharp trade slowdown set to wallop GDP

The high dollar and the global slowdown are crushing Canada's trade-dependent economy.

The latest evidence: The country posted the largest trade deficit in July since Statistics Canada began keeping records in 1971.

It wasn't just the scale of the gap - $2.3-billion - that jolted analysts. It's how the economy got there.

Virtually all major exports fell sharply, including energy, autos, agriculture, forest products and machinery-and-equipment. The overall drop was 3.4 per cent, paced by an even larger 5 per cent decline in exports to the U.S. - Canada's largest customer.

At $2.3-billion, the trade deficit narrowly eclipsed the old mark, set in September 2010.

Scotiabank's Mr. Holt said the high dollar is most damaging to U.S.-bound exports, which accounted for 72 per cent of all exports in July.

Currency Issue?

Sorry guys, this is not just a currency issue. This is a global recession, starting in Europe, continuing in Asia and as of June hitting the US. Few even see the US recession yet, but it is here, and Canada will be on the leading edge of it all.

China Factor

This is not unexpected in this corner, albeit I have for so long predicted the end of the Canadian housing bubble that no one is listening to anything else I have said about Canada.

Those who want to catch up on what is happening in China and how it is guaranteed to affect Canada may consider the following posts.

• By 2015 Hard Commodity Prices Will Collapse; Australia's Mining Boom Dies (and the Official Denials Start)
• Non-Food Commodity Prices Will Collapse Over Next Three to Four Years; Nails in the Hard Landing Coffin?
• Currency Wars, Commodity Prices and Capital Flight; China FDI Contracts 8.7% YoY, 8th Drop in 9 Months

All three of those pieces originate from Michael Pettis at China Financial Markets. What he suggests about China and Australia, I have long-since stated applied to Canada as well.

Those posts are just the start of Canada's problems. Europe is in a massive recession that few saw coming. I commented on that silliness on January 9, 2012 in Dimwit Comment of the Day: Christine Lagarde, IMF Director says "Europe May Avoid a Recession This Year"

Global Recession

Heck, even the vaunted German export machine is falling apart. See Germany in Recession: Private Sector Sees Fastest Falls in Output and New Business Since June 2009; New Export Orders Collapse

In the above post I commented ...

Global Recession Revisited

On July 6, 2012, I wrote Plunging New Orders Suggest Global Recession Has Arrived

Clearly I am not changing that prognosis although I do wish to reiterate the definition of "global recession as per my post Case for US and Global Recession Right Here, Right Now; Recognizing the Limits of Madness; Permabears?

US Recession Factor

On June 21, 2012, I gave 12 Reasons US Recession Has Arrived (Or Will Shortly)

On September 7, I stated a specific belief the US entered recession in June.

For my reasons, please review Household Survey: Number of Employed Declines by 119,000 as Those Not in Labor Force Rises by Spectacular 581,000; Yes, Virginia, It's a Recession

The three people I am aware of sticking with a recession call right now are John Hussman, Lakshman Achuthan at the ECRI, and me.

Indeed, John Hussman announced yesterday in Late-Stage, High-Risk "I continue to believe that the U.S. joined an unfolding global recession, most probably in June of this year."

In Hussman's post he states a belief backdated downward revisions are coming up. I concur with his analysis.

The collapse in the household survey is an indicator as is the collapse in Canadian exports to the US.

Canada Housing Bubble

100% without a doubt, Canada is in the midst of an immense housing bubble. The Canadian bubble outlasted bubbles in China and Australia. Because it did, I get taunts from Canadian readers all the time.

I received one just yesterday. It went something like this "So Mish, where's your Canada Housing Collapse?"

The answer, as always is "I don't know". That said, bubbles pop by definition. Moreover, the longer the bubble lasts, the bigger the implosion.

Australia is in the midst of a big property bubble collapse, a big retail collapse, and a big export mining collapse all at the same time.

Canada will follow suit at some point and given taunts out of the blue, now is as good a time as any.

Addendum:

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