A Canadian Says "Short Canada"

[fmccap]

A Canadian Says "Short Canada"

[Edstock]

Like most things in life, he's right and he's wrong.

 

He's probably right about real estate prices, especially in Toronto and Vancouver. It is important to remember that the dynamics of Canadian real estate are completely different than those of the US. Why? Because in Canada, you cannot claim mortgage interest against income, for your primary residence. So, in Canada, all those homes are paid for with after-tax dollars.

 

That being said, Vancouver prices zoomed with Asian immigration, as have Toronto's, though immigration is more broadly based in Toronto. Both could take a 30% tumble.

 

He's probably wrong about the Ontario provincial deficit. He is correct about Ontario's deficit problem in the past. It lead to "The Harris Revolution", and brutal cut-backs, for years. Now, Toronto's "infrastructure", roads, sewers, etc. is old and corroded and broken, and has to be re-built. It's one of the reasons the Escape sells so well — the big tires cope with TO's crappy roads much better than a Focus can.

 

Some of this deficit is similar to the US stimulus package, as the province had to pony up support for GM and Chrysler.

 

Some of the writer's comments are conservative upset, like full-time kindergarten. Maybe it's a good idea, maybe it isn't.

 

What it is, however, is an attempt to help alleviate the "income squeeze" on average Canuck families, where both parents have to work, let alone single-parent families, to help them cope with the costs of daycare. The swipe at university education being a requirement is gratuitous, as Ontario and the rest of Canada have state-subsidized colleges and universities. There are no private universities in Canada, AFAIK. So, over the last 50-60 years, we have put a lot of people through college.

 

Anyway, the future sure is going to be interesting.

[fmccap]

Like most things in life, he's right and he's wrong.

 

He's probably right about real estate prices, especially in Toronto and Vancouver. It is important to remember that the dynamics of Canadian real estate are completely different than those of the US. Why? Because in Canada, you cannot claim mortgage interest against income, for your primary residence. So, in Canada, all those homes are paid for with after-tax dollars.

 

That being said, Vancouver prices zoomed with Asian immigration, as have Toronto's, though immigration is more broadly based in Toronto. Both could take a 30% tumble.

 

He's probably wrong about the Ontario provincial deficit. He is correct about Ontario's deficit problem in the past. It lead to "The Harris Revolution", and brutal cut-backs, for years. Now, Toronto's "infrastructure", roads, sewers, etc. is old and corroded and broken, and has to be re-built. It's one of the reasons the Escape sells so well — the big tires cope with TO's crappy roads much better than a Focus can.

 

Some of this deficit is similar to the US stimulus package, as the province had to pony up support for GM and Chrysler.

 

Some of the writer's comments are conservative upset, like full-time kindergarten. Maybe it's a good idea, maybe it isn't.

 

What it is, however, is an attempt to help alleviate the "income squeeze" on average Canuck families, where both parents have to work, let alone single-parent families, to help them cope with the costs of daycare. The swipe at university education being a requirement is gratuitous, as Ontario and the rest of Canada have state-subsidized colleges and universities. There are no private universities in Canada, AFAIK. So, over the last 50-60 years, we have put a lot of people through college.

 

Anyway, the future sure is going to be interesting.

I was not saying he was right or wrong, I'm not from there so I don't know.

 

I just thought it was interesting(especially the ties to the US and it's effects) and thought I would share it with my neighbors up north.

This isn’t good news for America. We are by far your largest trading partner. We consume more American made products than any other nation by a long shot (4 times what China consumes). If our economy crashes in the near future, it will impact tens of millions of US workers who depend daily on the free trade of goods between our countries.

[Edstock]

No argument with it over-all, I was just pointing out some background conditions and facts that a lot of Americans may be unaware of.

 

Things like the Ontario deficit being used to replace a lot of worn-out infrastructure because of the necessary cut-backs that got carried too far, and explaining why the effort to create all-day kindergarten, and why college education is as common as it is in Canada.

 

It's obvious, that a depression in the US will have severe effects on Canada, and these are challenging times for both countries.

 

It is also instructive to remember that we are not alone. The UK Telegraph has an interesting piece:

 

It is Japan we should be worrying about, not America

 

Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return.

 

http://www.telegraph.co.uk/finance/comment...ot-America.html

[Trimdingman]

Ontario has a socialist Liberal government. The last government, which Edsock disparagingly referred to, was Conservative, and turned the economy around much like Ronald Reagan did for America. The left wingers hated him and the right loved him. I loved Mike Harris. The unions hated him. He has been gone for over seven years now, and Ontario's economy is almost back to where it was under his predecessor, the lefty Bob Rae of the "New Democratic Party", a suedo-Communist fringe party that surprised everybody when it turfed the overly arrogant Liberals under David Peterson. Just like Bob Rae did during the early 90s recession, Dalton McGuinty is using the "tried and failed" tax and spend policy. The only thing holding the country together is the fragile Conservative minority government in Ottawa. With socialists on all sides, he is like Davy Crockett defending the Alamo. All in all, we are in no better shape than the US.

[suv_guy_19]

I don't think there's that much of a problem. Canadians save more and have less debt overall than Americans. The federal government has a debt much smaller than the Us federal government, although some provinces carry large debt. I really haven't heard any economists here talking about a bubble.

[fmccap]

I don't think there's that much of a problem. Canadians save more and have less debt overall than Americans. The federal government has a debt much smaller than the Us federal government, although some provinces carry large debt. I really haven't heard any economists here talking about a bubble.

Your government is much smaller than ours also.

 

There are probably ones talking about it but they are disregarded just like we had ones talking about it that were disregarded.

[suv_guy_19]

Your government is much smaller than ours also.

 

I think per capita it's probably larger. By that same per capita number, we carry far less debt. The provinces (some of them) carry quite a bit, but most of them have good credit ratings.

 

I hear from many economists all of the time on TV on these issues. Canadians don't take risks like Americans. We don't have nearly as many booms and busts.

Edited November 7, 2009 by suv_guy_19

[suv_guy_19]

With all of that said, as the article notes, the Canadian economy is very dependent on the Us economy. 1/3 of our economy is exports, and between 70 and 90% of that goes to the US. We can't recover until the US does, but with rising wages and relatively stable employment outside of a couple of areas, I don't see many problems ahead.

 

I do see difficultly getting governments to get back out of deficits in reasonable time without much pain. It's probably a good bet that some government departments may end up suffering again like they did in the 90s. That said, I think most economists would agree that Canada is in much better shape now than it was in the early 90s. Debt held by both the individuals and the public is lower, people make more, and our economy has nearly tripled in size and has done that by growing at a steady medium pace. Taxes are lower in real dollars and as a percentage of the economy as a whole. While other nations are increasing tax loads, ours is falling (though I expect that to change somewhat in the future). Things certainly aren't perfect, but when I look around where I live, I don't see many problems. I know that isn't true for all areas, but on the whole, we're still doing OK. I'm sure there will be a time in the future when we will suffer setbacks, but we haven't really seen the economic problems of the US. We've simply seen the side effects.

 

There is a country doing better than us though - Australia. They carry almost no debt and they seem to have a great deal of money to spend. Their per capita GDP is also slightly higher than ours now, and they've switched places with US on the HDI again to be just above us. I still love my country though, and I think for the most part, it's on the right track. Once the recession is over though ,the government needs to return to the fiscal discipline of the past.

 

Oh, but housing prices have to come down in some markets. They're crazy now and they will end up doing damage. I expect to see them fall in a few select cities, but I don't see that doing massive damage to the economy. It will probably actually help.

 

This seems to simply be a right wing blog that hates liberal government policies, something governments in Canada have employed for a very long time. Spend when you need to, and don't spend more than you have when you can help it.

Edited November 7, 2009 by suv_guy_19

[jpd80]

A lot of the money Obama reportedly spent was in fact, loans that will be repaid in the near future.

As that money returns, the socialists might even make a buck out of the reformed wall street capitalists.

It will be interesting to see what actually happens with the value of the dollar as that money returns....

Edited November 7, 2009 by jpd80

[Trimdingman]

A lot of the money Obama reportedly spent was in fact, loans that will be repaid in the near future.

As that money returns, the socialists might even make a buck out of the reformed wall street capitalists.

It will be interesting to see what actually happens with the value of the dollar as that money returns....

 

 

"Interesting" is an understatement. If you take the amount that the stock market went up in this rally, and adjust to gold value, based on the price of gold before the rally, you will see that it actually went down. If you were to increase interest rates to their true value based on market conditions, we would be in a depression like the world has never seen. What you are looking at is a mirage. It is like the Roadrunner in the cartoon. He is standing in a cloud. When the cloud moves away, he sees that he is standing on thin air.