For any of us that have been quasi-sentient since 2000, when George W. Bush was elected, there's been a huge warning flag on the US economy - mortgages.
If you haven't followed the headlines, there are all sorts of rather nasty little mortgage schemes out there - from so-called "sub-prime" mortgages for high risk purchasers, to "interest only" mortgages. All of these schemes are based on the gamble that prices are going to go up faster than the costs of maintaining the mortgage. (A risky gamble even in a good economy)
Foreclosure rates in the US are skyrocketing right now, as some of the secondary terms of these mortgages kick in, and people discover that suddenly they cannot afford their homes.
The social aspects of this aside (although they are significant!), the recognition has to be made that these "alternate" mortgages - which make high ratio mortgages in Canada look positively trivial to deal with - have been part of what has kept the US economy going in recent years. People have been encouraged to refinance their homes to make major capital purchases - whether that's a fancy new car in the driveway, or a vacation. The US economy's growth has been heavily driven in recent years by consumer spending - not industrial production, not massive growth in technology, and not by military spending. In fact, one might argue that Bush's entire war in Iraq has been financed primarily by the government convincing people to spend money - profligately.
Now, how does an emerging mortgage crisis in the United States affect Canada? Potentially quite badly. A lot of Canadian trade is providing products and services into the US market. The Canadian softwood lumber dispute may quickly become moot as the US housing market finds itself flooded with a lot of homes on the market.
US consumer spending drops off, and Canadian revenues drop with it. Including Alberta's oil-driven cash flood to some degree. (Although US government desire to free itself from the Middle Eastern oil supplies may offset slowdown somewhat - if people can't put gas in their great big Hummers ... )
Amazingly, a "Conservative" government in Ottawa is increasing spending, constricting government revenue streams and assuming that Canada's economy is going to remain on pretty healthy footing, when our major trade partner is developing influenza like symptoms.