Let he who is without half-a-trillion sins - Macleans.ca

Let he who is without half-a-trillion sins


The government of Canada is worried that Canadians are taking on too much debt. I repeat: the government of Canada is worried that Canadians are taking on too much debt. Folks, you couldn’t make this stuff up….


Let he who is without half-a-trillion sins

  1. The Government of Canada can afford its current and projected debt load, while some consumers may not be able to without significantly increasing their risk of default. There is a reason governments can borrow for a couple of hundred basis points in real interest rates.

    • Actually the govt can't either.

  2. The Government of Canada can afford its current and projected debt load

    Really? Why can they afford a structural deficit with no plans to eliminate it?

    • Even though we have a structural deficit, if we can get it down to about $15 billion, even 3% nominal GDP growth will keep debt/GDP constant. We also have a very low public debt-load compared to most industrialized countries. I’m not saying I don’t care if we return to balance. I think we should. It just is not a crisis or reckless to borrow money at this point.

      As a young person, I think the boomers (who are now in their peak earning years) should be paying their fair share now so that we, their children, are not saddled with undue burden (and much higher taxes) to keep them in the lifestyle to which they’ve become accustomed.

      • No problem for this boomer to pay higher taxes to help out with the debt. Of course, then we old folks will have to charge you youngsters for your use of the infrastructure that our taxes and (repaid) borrowing have paid for.

        • You’re kidding, right? Much of our national infrastructure was built during the boomers’ parents’ generation. The boomer years have been marked by massive underinvestment in infrastructure. We have an infrastructure deficit in excess of $120 billion just to maintain current services. That is in addition to the half trillion debt than the boomers are bequeathing to their children, almost all of which was racked up in a 20 year period of boomer early adulthood.

          • Let's get the facts (and history) straight shall we.

            My parents and your grandparents made most of their money during the 1960 to 1990 period while the debt was accumulating. The boomer generation didn't start to make real money until the up-cycle of the 1990's, and we then started to pay down our parent's debt, and have continued to do so.

            You and that fool Harper (and the sad-sack voters of this country) have now decided to start adding debt because your generation is whining that they need less taxation and more plasma tv's and other doo-dads to which you believe you are entitled, while trying to blame old people for all the world's problems.

            As for the infrastructure deficit, that's pure myth promulgated by doomsayers. If it breaks, you fix it. If not, don't worry about it. That's the way it has been for two thousand years. Worrying about the sewers is a waste of time (pun intended).

          • "while trying to blame old people for all the world's problems."

            No, we're just blaming them for $500 billion dollars of debt. And you can't really blame the young generation for the current policies. The boomers elect governments because there is more of them and they vote more than their kids do at the moment. It's they who want low taxes and their entitlements.

          • I don't know about the rest of the seniors but I am not dripping in luxury. You would think having a $500 billion debt load Canadians could say how they benefited.How much did the ordinary Canadians benefit from all that debt. Pls. tell me because most of us are still struggling to survive.

        • Your parents paid for the infrastructure you used, just as we'll pay for the infrastructure our children used. That's the nature of infrastructure – it lasts a while and is meant as an investment. Besides, with the average boomer being sorely under prepared for retirement, we'll likely be paying for boomers' entitlements (pension, health care being the big ones) while still handling the debt left to us.

    • Your buddies and that idiot Iffy are already complaining that Harper is going to make cuts and of course the reason he is doing it is because he hates government and wants to reduce it to its smallest size. Does Iffy know how stupid this sounds? I don't think so because he keeps putting his two feet in his mouth.
      Unfortunately for Libs and their treasured programs we are going to see many of the wasteful programs eliminated which makes me very happy. Supporting tulip festivals in Ottawa or anywhere else is not why I pay taxes.
      So watch the Libs and the NDP scream likes stuffed pigs on March 4th. Cut the deficit but don't cut the deficit that will be the cry of the opposition parties.

  3. Gall is divided into 3 parts.

    The economy.



  4. Policies such as this are enough to really shift one to the right… that is if Canada had a political party standing off in that direction.

    If one believes Flaherty (well then one is an idiot), however taking his statements at face value, this is not about a public good (i.e. avoiding a bubble) rather it is a nanny-state interventionism against individuals going into debt. Why? Because when an individual defaults on their mortgate there is a danger that a bank will lose money.

    • These mortgages are government insured. It says here that that gives the government the right to dictate which mortgages get insured.

      • I assume the "here" was intended to be a link. No matter….

        I would say that the government has no "rights", rather it has obligations, responsibilities and powers. ( I realize terms such as the rights of nations are referred to in international law… but this is clearly domestic.)

        When one talks about governments having "rights", the implication is that they can proceed capriciously, will-nilly, without justification, doing whatever they want provided they stay within their "rights". I have a whole wack of such rights descirbed in the Charter and probably quite a few more that were not spelled out there. I can believe in aliens, wander about the country aimlessly, create facebook sites for wackos like myself without rhyme, reason or justification.

        The responsibility of government is to always act in the nation's interest and unless the nation's interests precludes it, justify their decisions. After announcing the decisions on mortgates, Mr. Flaherty made some attempts at justification which amounted to… there is no problem, we just did this to help the banks make more money.

        ps If you want to support this government, declaring they have "the right to dictate" is perhaps not the best talking point.

        • Saying that the taxpayer is on the hook for a defaulted morgage, and so the government is entitled to take measures to see that doesn't happen as often, is a pretty good talking point though.

          You can still believe in aliens if you want, but flipping a house will be a little more difficult for you.

          Did you believe those infomercials telling you you could make millions flipping real estate with no money down?
          Get 20% of the value to put down, it's not that unreasonable, and will probably save some from making a bad mistake.

          I see nothing capricious in what Flaherty announced today.
          Seat belt laws can be seen as nanny statism if you look at them in a certain way.

      • And when people default it is the taxpayer who picks up the tab. Come on Stewart think. Quit with the partisan comments. Based your comments on logic. Some people need to be protected from their themselves. Obviously you don't have adult children. I do and have seen it first hand.

  5. I believe it was George Will but some talking head a few months ago was talking about debt and said 20 years ago, people were mostly thrifty and wanted the government to be the same. Now, we have people behaving like government – taking on more and more debt without regard of consequences.

    • Flaherty wants us all living in boxes under bridges and debt free so he can steal even more of our money.

      jolyon = Joe the Plumber?

    • I also find it odd how Flaherty divides Government of Canada and Canadians when they are the exact same

      Bravo! If only more of us realised that we ARE the government, perhaps we wouldn't gripe so much about "them" stealing our money and actually get down to ensuring the country is run the way we want it to be, and that we are spending our money wisely.

    • "Flaherty wants us all living in boxes under bridges and debt free so he can steal even more of our money."

      You are correct, that is the vagrancy component of the Law and Order provisions to be passed by our newly unelected senators.

  6. This is kind of like that time Jane Taber wrote a column on the ten most irritating people in Ottawa.

  7. Why is it that in Canada we generally only look at the federal government's debt and compare it to other countries' overall general goverment debt?

    Right now we are slighly below the United States debt to GDP ratio (they were below us until 2009). We're way above the United Kingdom's.

    But all I ever read is that we're way better off because for some magical reason we don't count Canadian provincial debts but we do count them for other countries (if they are even allowed to have sub-government debt).

    Is it a consitutional division of powers thing? Would it offend the provinces? I just don't get it.

    • The Feds have been peddling that lie for so long that the media doesn't even bother to look for the truth anymore.

  8. Thanks for the afternoon chuckle, Mr. Coyne. I needed one.

    It's Flaherty rapping Canadians' knuckles before they put their hands in their own cookie jar. Save your money folks 'cause though he's not saying so, in some sneaky way, taxes WILL GO UP.

    You heard it hear first, er, second, er , …. for the umpteenth time.

    • Payroll taxes on EI are going up dramatically this year.

      • And yet they won't cancel the corporate tax rates reduction. Those two facts put together win the most bone-headed move in history award, IMO.

        Oh wait, the GST reduction when they *knew* the economy was slowing at least to some degree also qualifies for that award.

        • Is it really the most boneheaded move in history?

          Seems like Jim Flaherty, the provincial Minister of Finance, thought cutting the GST would be up there:

          Hon Mr Flaherty: The member opposite again raises the question of reducing the sales tax. I must say that with respect to tax cuts, I agree with Paul Martin. With respect to reducing the GST federally and the RST provincially, I also agree with the federal minister, and we've talked about this. All you get is a short-term hit, quite frankly. You accelerate spending. You pull it ahead by a month or two. It has no long-term positive gain for the economy.

          On this side of the House — and I say this with respect to the member opposite — we're interested in long-term, sustainable economic growth and the creation of permanent jobs in Ontario. That's what grows the economy. That's what helps people. That's what helps retailers in Ontario, not short-term, knee-jerk actions.

  9. I don't know what's so funny – both the Canadian government and the average household are both carrying too much debt. They hypocrisy runs both ways – the government thinks Canadians have too much debt, despite having massive debt itself, while Canadians think the government has too much debt, despite having massive debt themselves!

    But since both groups are right, if both insists that the other lowers its debt (and takes steps to ensure it happens, through regulation by the government and political pressure by Canadians), hopefully both debt levels will go down and we'll all be a lot better off.

  10. Are we really going to pretend that the worldwide economic implosion of one year ago didn't happen?

    This may be superficially hypocritical, but it really isn't at all comparable. One or two years of stimu-deficit isn't going to cause the problems badly overleveraged homeowners will.

    The thing that gets me about this is that Flip-Flop Flaherty loosened the rules on mortages a few years ago. This is essential admitting that he screwed up. Again. Just like income trusts and the unsustainable equalization that he started and stopped.

    These are not small hiccups. They're market-crushing, federation-dividing clusterpucks. He has been an objectively awful finance minister and should resign before he screws up so bad he can't fix it.

  11. This from the government that introduced 40 year mortgages, that introduced no down payment mortgages, that (under the heavy lobbying of major US mortgage insurers) agreed to guaratee mortgage insurance claims for which the taxpayer is on the hook for hundreds and hundreds of millions of dollars.

    They really really are just making it up as they go along.

  12. Mr Coyne must be hanging out with some of the sour Brit media while in Vancouver.

    You should be happy the govenrment is taking actions to avoid future liability from these government guaranteed programs…whether it is formally, it is well known the govenrment would back CMHC.

    Secondly, it is a good thing to eliminate the low down payment for investment properties. One hopes over time that the government will move to raise minimum down payments for home buyers.

    Goven that the other two parties are both on record as saying we should be spending more and it shoulod have been spent faster the current crew are the misers of the bunch. (dont bother talking about cut taxes since the whole point of the stimulus program was to go into deficit.)

  13. When you're a billion dollars in debt, the bank owns you. When you're a trillion dollars in debt, you own the bank.

    Perhaps this is all part of an ingenious Canadian attempt to take over the world. Ze replays of Strange Brew vill continue until morale improves!

  14. Why would you be surprised by this, Coyne? Harper and the Conservatives follow the dictum of "do as I say, not as I do". And they've been doing it since they first got elected.

    • Is Harper in personel debt?

      That is news. He's supposed to be an economist.

  15. I think this is a pretty silly post on Coyne's part.

    Canada's debt load is quite low compared to both other countries and previous levels within Canada.

    There is no evidence that Canada's debt load is in anyway a "problem" for Canada's long term economic outlook.

    • It's called structural unemployment.

      Those manufacturing jobs aren't coming back.

      • They are getting jobs in other sectors. This process has been proceeding for a decade. The problem is obvious because a whole raft were laid off very quickly. They will be absorbed by other industries.

        • If you replace decade with half century, that makes sense.

          The ability of the media to hype this problem is amazing.

    • RayK's nicely turned CON talking point seems a touch ingenuous, considering the flailing and hair-setting-on-fire when it was Chretien and Martin trying to wrestle the demon deficit (and the ever-present debt clock) into submission… Nothing wrong with believing that debt is good. It's just another twist on the Gordon Gecko meme, though…

      • What worries me even more is this idea that everything is peachy-keen, and we aren't facing any major problems at all….which is pretty much what Harper said right before the bottom fell out!

        • Admit it, you're hoping the bottom falls out, so that you can cry about the suffering Harper has caused.

          You must be one of those Dipper vampires. The more suffering you can exploit, the more you like it.

    • Um, if I do recall, correct me if I am wrong, but Harper had a surplus when he took office and now his has not just a deficit but the biggest deficit in our history, a structural deficit to boot (meaning we need to borrow just to pay for program spending let alone to deal with the ups and downs of the economy, spending increases and revenue), and Harper was responsible for breaking all Canadian spending records with his first budget and then breaking his own record on his second budget all before the recession.

      So for the Harper government to be giving us Canadians lessons on finances is laughable. At best.

  16. "the whole point of the stimulus program was to go into deficit" OY!

    So glad you told us about the point of the program when some of us thought that was a bad side effect. . Perhaps we've had enough "stimulus" to last for a lifetime or two.

  17. Did you know the gov’t allows payday loans using CCTB payments as collateral? They give with one hand and allow the loan sharks to take 20% of it.

  18. Implications of a low savings rate:
    -Reliance on foreign capital to finance investment projects
    -A trade deficit and corresponding decrease in the value of the dollar (the US can avoid this somewhat because it is the international reserve currency)
    -lower economic growth in the medium run
    -recessions become tougher for individuals that have not saved

  19. Average Canadian debt: $96,000
    Debt to income ratio: 145%

    National debt as a % of GDP: 28.6%

    While going up, the government is much less indebted, relative to national income than most Canadians are, relative to their incomes. Thus, apart from the fact that Canada's low rate of savings has serious policy implications, the government has both the moral standing and policy sanity to lecture Canadians about debt.

    • Thank you for actually bringing facts and context to this discussion. You can complain about the government's handling of its finances, but what's happening in our housing market, and with respect to Canadians' individual debt loads, is a separate issue. I for one am happy that Flaherty and the government are taking action on the mortgage front. I live in Vancouver, the most unaffordable place in the country to buy a house, and I have friends who have taken on idiotically large mortgages lately, entirely because of ridiculously low interest rates AND the fact that it's ridiculously easy to get a mortgage approved. I just had one friend take on almost a million bucks in mortgage debt recently, while she put down the absolute minimum down payment. While this might be ok in some isolated circumstances, in macroeconomic terms, and in terms of public policy, it's madness.

  20. Banks aren't lending enough, but debt is too high!

    Seriously, though – if the government wants Canadians to save money they should get off the interest rate and make it worth our while for even those without much extra to put something away.