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Thread: July 8, 2020 Federal Fiscal Update

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    Default July 8, 2020 Federal Fiscal Update

    I'm going to start by quoting from the Covid thread:

    Quote Originally Posted by sabad66 View Post
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    Holy fuck, these numbers from the fiscal update are insane:

    - Deficit for 2020-21 rises to $343.2 billion from $34.4 billion projected before pandemic.
    - Net federal debt will hit $1.2 trillion.
    - Federal debt-to-GDP ratio is expected to rise to 49% in 2020-21 from 31%
    - Direct federal support for Canadians and businesses: $212 billion.
    - COVID-19 slowdown has cost.the federal treasury an additional $81.3 billion.
    - GDP will shrink by projected 6.8% this year —.worst since the Great Depression.
    - Economy is expected to bounce back by 5.5% next year.

    https://apple.news/A40fJCCe0Qf6eV-6hmAQ1WA
    I feel like this topic deserves it's own thread because it's not specific to the virus per se, but it's something I believe deserves some serious discussion by the public. I also think this thread belongs here and not in the finance forum because this is something that will impact the way of life for all Canadians.

    My first reaction is HOLY $%&#!!! Did we just hit the financial iceberg and we're all standing on the deck of the Titanic? Well I guess it depends. Compared to the Americans we're still way better off but I don't want to use them as an acceptable standard, that's a dumpster fire I want no part of but when looking at places like China & Australia who were both at or just below 50% in previous years maybe it's not all that bad?

    So Beyond, are you okay with your government owing four times every dollar they bring in from you?
    Last edited by Masked Bandit; 07-08-2020 at 02:44 PM. Reason: Clarification
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    It's pretty nuts. We added 40% to our national debt in a single year. From ~850 billion to 1,200 billion in a single year or in terms of our deficit that accelerator our debt levels by over a decade (34.4 billion deficit last year x 10 years = 350 billion in added debt over a decade).

    It's actually going to be scary because our debt servicing costs are going to be significantly higher now which means a larger deficit every single year just to service our debt.

    I think we had to do it given everything that happened (not saying it couldn't have been executed better ... CERB is a mess of people not wanting to go back to work) but it's going to be interesting to see what happens going forward to try and balance things. Every year politicians bullshit about 'oh we'll balance the budget in 5 years' but never do ... I wonder if the minority parties might push for an election over this and then parties can campaign based on what do to moving forward? Idk if that'd help though, Liberals might just get more votes because of all the money given out.
    Nolan

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    You might want to revise your "we're better than the US" conclusion once you review the fiscal situation of individual provinces. The Feds are likely going to need to bail out provincial finances in a big way, and you will see the Fed debt ratio go to the moon.

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    Quote Originally Posted by Buster View Post
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    You might want to revise your "we're better than the US" conclusion once you review the fiscal situation of individual provinces. The Feds are likely going to need to bail out provincial finances in a big way, and you will see the Fed debt ratio go to the moon.
    I hadn't thought of that angle but wouldn't the Americans have the same problem at the state vs. federal level? I truly don't know anything about that kind of finance.
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    Quote Originally Posted by Masked Bandit View Post
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    I'm going to start by quoting from the Covid thread:



    I feel like this topic deserves it's own thread because it's not specific to the virus per se, but it's something I believe deserves some serious discussion by the public. I also think this thread belongs here and not in the finance forum because this is something that will impact the way of life for all Canadians.

    My first reaction is HOLY $%&#!!! Did we just hit the financial iceberg and we're all standing on the deck of the Titanic? Well I guess it depends. Compared to the Americans we're still way better off but I don't want to use them as an acceptable standard, that's a dumpster fire I want no part of but when looking at places like China & Australia who were both at or just below 50% in previous years maybe it's not all that bad?

    So Beyond, are you okay with your government owing four times every dollar they bring in from you?
    My view right now is that we need to make the best of a bad situation. I am not okay with the defecit or the debt, but I also can't say I'd have done anything different if put in the libs position. Keeping the country afloat had to happen because decades of terrible fiscal policy (globally, not just us) has left the average person completely unable to weather the storm. So the alternative was mass financial crisis.

    In one scenario, we wind up paying for these people anwyay. In the other, at least we are in front of it.

    At least, that's what I'm telling myself as I brace for an increase in taxes to support a bailout that I did not qualify in any way for and did not directly benefit from. lol

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    Quote Originally Posted by Masked Bandit View Post
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    So Beyond, are you okay with your government owing four times every dollar they bring in from you?
    No.

    The biggest concern for me though is not even the absolute numbers it's that in 6 months all our Finance Minster could muster up was a snapshot.

    Where the hell is his plan to see ourselves out of the other end?

    Only in government is that acceptable if I provided that level of service in my role it would be an indefinite can but it's totally acceptable in his capacity as finance minster....

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    Quote Originally Posted by A790 View Post
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    My view right now is that we need to make the best of a bad situation. I am not okay with the defecit or the debt, but I also can't say I'd have done anything different if put in the libs position. Keeping the country afloat had to happen because decades of terrible fiscal policy (globally, not just us) has left the average person completely unable to weather the storm. So the alternative was mass financial crisis.

    In one scenario, we wind up paying for these people anwyay. In the other, at least we are in front of it.

    At least, that's what I'm telling myself.
    The problem with the COVID response is really just an extension of the problem with global policy. The best way for elites to scoop wealth is to employ government to do it on their behalf. The bigger the government the more wealth gets concentrated. The great liberal lie (error?) is that big government assists in wealth redistribution and reduction in inequality. This holds true in general, but also in specific: big government interventions also create wealth concentration. Exhibit A: the stock market going bananas despite the world falling apart.

    The big gov't interventions of our lifetimes: 2008 and now 2020 are not designed to "save the economy", pe se. They are designed to head off social unrest and chaos. The problem is that it will further ossify our already zombie-fied economy....er...kleptocracy.

    The other big problem is that post-crisis I believe it will push people in exactly the wrong direction to solve the problems: bigger government, more intervention, marxism, more crony capitalism etc. This just compounds the problem. The real solution to the problem will be spoken by a drowned-out minority: a return to individual responsibility, true free markets and capitalism.

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    Quote Originally Posted by Buster View Post
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    The problem with the COVID response is really just an extension of the problem with global policy. The best way for elites to scoop wealth is to employ government to do it on their behalf. The bigger the government the more wealth gets concentrated. The great liberal lie (error?) is that big government assists in wealth redistribution and reduction in inequality. This holds true in general, but also in specific: big government interventions also create wealth concentration. Exhibit A: the stock market going bananas despite the world falling apart.

    The big gov't interventions of our lifetimes: 2008 and now 2020 are not designed to "save the economy", pe se. They are designed to head off social unrest and chaos. The problem is that it will further ossify our already zombie-fied economy....er...kleptocracy.

    The other big problem is that post-crisis I believe it will push people in exactly the wrong direction to solve the problems: bigger government, more intervention, marxism, more crony capitalism etc. This just compounds the problem. The real solution to the problem will be spoken by a drowned-out minority: a return to individual responsibility, true free markets and capitalism.
    We are close to alignment but different on the last bit. I believe that unrestricted capitalism is a bad thing. Guiderails need to exist.

    But I do believe and have been preaching to anyone who will listen that this is a massive wakeup call to anyone that does not save. Individual fiscal intelligence is needed to endure and survive this. You can't rely on the government to save you when things go wrong every time they go wrong.

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    I guess a trillion dollar debt is the new normal.

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    Quote Originally Posted by A790 View Post
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    We are close to alignment but different on the last bit. I believe that unrestricted capitalism is a bad thing. Guiderails need to exist.

    But I do believe and have been preaching to anyone who will listen that this is a massive wakeup call to anyone that does not save. Individual fiscal intelligence is needed to endure and survive this. You can't rely on the government to save you when things go wrong every time they go wrong.
    This is quite true. (Although I don't think I've been a proponent of unrestricted capitalism. But that's a larger conversation).

    Interestingly your solution regarding saving is the opposite of what gov't policy is trying to accomplish. They are lowering rates to kickstart inflation. What recent data seems to show, however, is that once rates go below a certain point (it appears to be 4%), then peoples' psychology changes and they go from "cheap rates, let's spend" to "I can't get a yield on my investments, so I must save more."

    So you're solution is exactly what the gov't does NOT want to hear or have people do.

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    Quote Originally Posted by Buster View Post
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    So you're solution is exactly what the gov't does NOT want to hear or have people do.
    I know. But at the same time, healthy individual finances is the only true long-term solve if we want to get off the government band-aid bandwagon.

    EDIT: Also, it occured to me just now that I don't think I actually know your view on capitalism. I have inferred that you are libertarian leaning and assumed that meant free capitalism. Sounds like a good topic to share a beer over.

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    Quote Originally Posted by A790 View Post
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    I know. But at the same time, healthy individual finances is the only true long-term solve if we want to get off the government band-aid bandwagon.

    EDIT: Also, it occured to me just now that I don't think I actually know your view on capitalism. I have inferred that you are libertarian leaning and assumed that meant free capitalism. Sounds like a good topic to share a beer over.
    While I hate to paraphrase people, in my view you are suggesting a solution which is equivalent to "let interest rates float so people can decide if they should save or spend or invest".

    Markets!

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    It’s all fun and games till everyone is reset to zero and the new currency is wakeboard boats and lifted trucks... then who will be laughing??!!

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    Quote Originally Posted by A790 View Post
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    I know. But at the same time, healthy individual finances is the only true long-term solve if we want to get off the government band-aid bandwagon.

    .
    Sooooo much of this! Largely though people don't want to hear it. They DESERVE that new car, they DESERVE to live in the nice part of town, they DESERVE to take a vacation and they DESERVE to have the government bail them out when the storm hits. The idea of personal responsibility especially in the realm of finance seems to be less & less common.
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    Quote Originally Posted by Masked Bandit View Post
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    Sooooo much of this! Largely though people don't want to hear it. They DESERVE that new car, they DESERVE to live in the nice part of town, they DESERVE to take a vacation and they DESERVE to have the government bail them out when the storm hits. The idea of personal responsibility especially in the realm of finance seems to be less & less common.
    CC companies and car sales.... no one that makes sub $50k/yr should have CC’s with combined limits over $80k, when the new financed vehicle cost is DOUBLE the MSRP for the vehicle you’re buying? Just say no!

    The “debt consolidation” companies play a role too... “oh, you don’t want to pay back that messily $10k? No worries, consumer proposal!”

    .... then they go out and still get a new vehicle, it’s okay... their partner who works part time for $10k/yr can have the east side dodge $60k caravan under their name so they can still go and refinance the house

    ...the shit I see

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    Justin Trudeau: “We took on debt so Canadians wouldn’t have to.”


    https://twitter.com/BNNBloomberg/sta...170201601?s=20
    Last edited by RawB8figure; 07-08-2020 at 04:36 PM.

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    Quote Originally Posted by Buster View Post
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    While I hate to paraphrase people, in my view you are suggesting a solution which is equivalent to "let interest rates float so people can decide if they should save or spend or invest".

    Markets!
    You may recall my reaction when the government dropped interest rates like two weeks into the market "crash". I'll paraphrase: "this is fucking stupid".

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    Quote Originally Posted by RawB8figure View Post
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    Justin Trudeau: “We took on debt so Canadians wouldn’t have to.”


    https://twitter.com/BNNBloomberg/sta...170201601?s=20
    IS that the dumbest thing I've said? Maybe.

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    Trillion dollar debt? Just introduce negative interest rates. Problem solved.
    Combustion engine cars - Bwahaha.

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    I don't know who's most fucked, Feds, provinces, or the cities, but in the end, it's the taxpayers. Truly fucked. Better get used to a much higher percentage of your earnings going to all the governments, and keeping very little for your own needs.
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    no one gives maritimers shit for culturally appropriating donairs.

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