Harper worried by U.S., sees no domestic bailout

Fri Sep 19, 2008 1:45pm EDT
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By David Ljunggren

OTTAWA (Reuters) - Prime Minister Stephen Harper said on Friday there were great concerns about the stability of the U.S. financial system but added he did not anticipate similar problems in Canada.

"I feel there are great concerns about stability of the American economic system," Harper told reporters, saying there was no need for Ottawa to bail out Canadian banks or financial institutions.

"The overall balance sheets of the Canadian financial sector remain very healthy," he said. "The best information I have ... is that the troubles in the financial sector of the United States should not spill over into Canada."

The United States is by far Canada's largest trading partner and slower U.S. consumer spending is already hitting Canadian industries.

"I certainly would not urge consumers to panic. Consumer spending in Canada has been very strong," Harper told a televised news conference in Farnham, Quebec.

Campaigning ahead of the October 14 general election, Harper has said that only the ruling Conservatives can be trusted to keep Canada stable as the U.S. crisis unfolds.

Polls show the Conservatives are likely to retain power and could even turn their minority government into a majority in the House of Commons.

Harper has also said there is no room for major tax cuts or spending initiatives, and has dismissed a plan by the opposition Liberal Party to introduce a carbon tax as a way to cut emissions of greenhouse gases blamed for global warming.   Continued...

<p>Prime Minister Stephen Harper delivers his speech during a campaign rally at St. Volodymyr Cultural Centre in Oakville September 16, 2008. REUTERS/Mike Cassese</p>