The Canadians are coming.
As America's economic clout has sagged amid a huge balance of payments deficit (much of it from imported oil) and borrowing to finance wars in Iraq and Afghanistan, our neighbors to the north have fared better.
The Canadian "loonie," for years worth a lot less than a buck, today is worth slightly more.
To add insult to injury, an increasing number of U.S.-operated companies are listing their shares on the Toronto Stock Exchange or its sister, the Toronto Venture Exchange, for small-cap companies.
From Duluth Mining, a $200 million market value copper-nickel exploration firm operating in northeastern Minnesota, to Rapid Brands of Chanhassen, a toner-cartridge refill franchiser, increasing numbers of U.S. outfits have found a financial home in Canada.
Patrick Donahue, vice president of corporate finance at Northland Securities, which raised millions of dollars for Duluth Metals and Franconia, another exploration firm on the Iron Range, said large investors made the companies promise that they would avoid a U.S. exchange listing for several years because of the large cost of complying with the federal Sarbanes-Oxley Act. The costs of compliance, which involves extensive auditing procedures and process documentation, hit harder on smaller companies.
"For a small company of $50 million or less in market capitalization, Sarbanes-Oxley is another $1 million in expenses, and the investors would rather they spend it on the business," Donahue said. "Moreover, there's a big public misconception in northern Minnesota that all these foreigners are coming in. They are Minnesota companies as far as operations go. The people and assets are here. About 70 percent of all the mining and [energy] exploration firms are on the Toronto exchange."
That's sweet music to executives of the Toronto Stock Exchange (TSX), one of the world's 10 largest but still smaller than the New York or Nasdaq exchanges in the United States.