1. The CPP has more than $600 billion in net assets, which helps prop up the balance sheet of the federal government. If Alberta and other western provinces withdrew, this could prove to be a crisis for the federal government (as well as aging Maritime provinces).
2. The federal government has the advantages that it can print its own money and it doesn’t deliver many services. The provinces don’t have this luxury. So the trigger for a debt crisis would likely be a large province becoming insolvent.
3. The Liberals, to the extent they think, seem to believe that they can earn Canada’s way in the world through real estate Ponzi schemes, green energy scams and immigration. Unfortunately the real estate sector doesn’t really create wealth, Canada can’t compete with China in terms of green technology and low skill immigrants are a net fiscal drain. The only possible hope for Canada to pay its bills is a return to resource development. But this goes against the relentless green propaganda we are subjected to.
4. We already have a covert devaluation in that foreign goods are more expensive and it is painful to travel in the US. By contrast, those who invested in the US are sitting pretty.
5. I see the recent push for pension funds to invest more in Canada as a sign of desperation from the government. They truly have no ideas.
Right, I just came across this piece and thought it was standalone.
One thing I don’t agree with is that Canada needs any substantial amount of immigration. Right now we have wildly passed the point of diminishing returns and we need a halt on immigration and repatriation of temporary residents. That would result in higher wages and force investments in productivity enhancements. Right now the solution to everything is to hire low cost migrants, with massive negative externalities.
I lived through the 1990s and I think some austerity is just what the doctor ordered for this country. We have been living on illusions for too long and need to return to reality.
One note is that the Chrétien cabinets, while including many Alan Rock style mediocrities, was a circle of giants in comparison to the current bozos and liars in Trudeau’s cabinet. Every single one looks and sounds odious. I have no faith in them to solve anything.
On the other hand, PP with his “build build build” emptiness shows no signs of genuine boldness, although an optimist may hope that he has something (anything) up his sleeve.
We need to start remigration policies, and start gutting social welfare spending and work on getting gutting government jobs and get the corpos under control. Trouble is none of these policies will be on the table, as the only parties willing to take these steps are banned from Parliament.
I think not many people would bother with that kind of half-measure.
Anyone savvy enough to get their money into a foreign bank (and thus limit their exposure to the Canadian banking sector) would presumably also take the logical step of holding their deposits in foreign currency (and thus limit their exposure to the Canadian dollar valuation).
Yes, I meant foreign currency as in USD, MXN, CHF, etc. In Japan, which has the worst-performing currency of any developed country, many people are looking to such solutions already. No point in going down with the ship.
All interesting. A few additional points:
1. The CPP has more than $600 billion in net assets, which helps prop up the balance sheet of the federal government. If Alberta and other western provinces withdrew, this could prove to be a crisis for the federal government (as well as aging Maritime provinces).
2. The federal government has the advantages that it can print its own money and it doesn’t deliver many services. The provinces don’t have this luxury. So the trigger for a debt crisis would likely be a large province becoming insolvent.
3. The Liberals, to the extent they think, seem to believe that they can earn Canada’s way in the world through real estate Ponzi schemes, green energy scams and immigration. Unfortunately the real estate sector doesn’t really create wealth, Canada can’t compete with China in terms of green technology and low skill immigrants are a net fiscal drain. The only possible hope for Canada to pay its bills is a return to resource development. But this goes against the relentless green propaganda we are subjected to.
4. We already have a covert devaluation in that foreign goods are more expensive and it is painful to travel in the US. By contrast, those who invested in the US are sitting pretty.
5. I see the recent push for pension funds to invest more in Canada as a sign of desperation from the government. They truly have no ideas.
CPP is theoretically firewalled from the federal balance sheet, though I agree provincial withdrawals would be a crisis.
I touched on a lot of similar themes in the prior piece (really I should have got the order right)
https://milesmcstylez.substack.com/p/how-to-defuse-canadas-debt-bomb
Right, I just came across this piece and thought it was standalone.
One thing I don’t agree with is that Canada needs any substantial amount of immigration. Right now we have wildly passed the point of diminishing returns and we need a halt on immigration and repatriation of temporary residents. That would result in higher wages and force investments in productivity enhancements. Right now the solution to everything is to hire low cost migrants, with massive negative externalities.
I lived through the 1990s and I think some austerity is just what the doctor ordered for this country. We have been living on illusions for too long and need to return to reality.
One note is that the Chrétien cabinets, while including many Alan Rock style mediocrities, was a circle of giants in comparison to the current bozos and liars in Trudeau’s cabinet. Every single one looks and sounds odious. I have no faith in them to solve anything.
On the other hand, PP with his “build build build” emptiness shows no signs of genuine boldness, although an optimist may hope that he has something (anything) up his sleeve.
We need to start remigration policies, and start gutting social welfare spending and work on getting gutting government jobs and get the corpos under control. Trouble is none of these policies will be on the table, as the only parties willing to take these steps are banned from Parliament.
Could Canadians transition from local to more solvent international banks that allow foreign currency deposits as a stopgap solution?
I think not many people would bother with that kind of half-measure.
Anyone savvy enough to get their money into a foreign bank (and thus limit their exposure to the Canadian banking sector) would presumably also take the logical step of holding their deposits in foreign currency (and thus limit their exposure to the Canadian dollar valuation).
Yes, I meant foreign currency as in USD, MXN, CHF, etc. In Japan, which has the worst-performing currency of any developed country, many people are looking to such solutions already. No point in going down with the ship.
This article is just fear mongering. The deficit is just a number, like a rolling credit card balance or something like that.
Shakespeare McLostboy, Co-Chair of the High School Drama Teachers Union
Slava Ukraini, Queers for Palestine, George Floyd say his name, LGBTQIOU.
Great piece, now do the US!
Someone beat me to it
https://boriquagato.substack.com/p/democracy-dies-in-deficits
Agreed- except America’s founders did not create a democracy!
https://open.substack.com/pub/lizlasorte?r=76q58&utm_medium=ios