It's Just An Economy

I'm sure that it will magically right itself somehow:

Remember when, in the 2015 Canadian general election, candidate Justin Trudeau made the controversial pledge to run up a $10 billion deficit? The Conservatives hated it, of course, but even the NDP accused the Liberals of spending on the “shoulders of future generations.”

Fast forward six years, and Canada’s deficit for fiscal year 2021 is projected to top out at an eyewatering $381.6 billion. We’ve all gotten used to massive quantities of borrowed money being thrown around during COVID-19 (particularly when the Americans keep approving trillion-dollar spending bills) but Canada is currently burning through borrowed money at a rate that is unprecedented in our history. ...

Canada is borrowing $27.80 per citizen, per day

There are 37.6 million people in Canada as of last count. Divide that by our total 2020 federal deficit and you have $10,151.63 in borrowed money for every single homo sapiens with a pulse living under the Maple Leaf. This means that for each day of 2020, every single one of us was having roughly $27.80 borrowed on our behalf — or a 15-pack of Molson Canadian from The Beer Store. The amount owing goes up considerably when you consider that upwards of 40 per cent of Canadians do not pay any effective income tax. When the figure is broken down among the taxpayers who will actually be expected to cover it, we’re looking at about $46 per day (which will buy you a two-four at The Beer Store). Oh, and the federal debt just passed $1 trillion for the first time.

We could have paid for another Second World War

Until the onset of COVID-19, it was generally agreed that the Second World War was the most expensive thing that Canada had ever undertaken. Government expenditures rose 4,000 per cent nearly overnight, and by 1943 Canada had one of the world’s largest navies and a powerful enough army to capture and occupy swaths of Italy, France, Germany and the Netherlands. From 1939 to 1950, the conflict cost Canada $21.8 billion. When converting that into 2021 dollars, that’s about $386 billion. Granted, modern-day Canada has a much larger population and GDP. Nevertheless, in a single 12-month span, we ran up enough deficit to pay the shipping and handling on every single bullet, shell and bomb we threw at Nazi Germany in the 1940s.

 

(Sidebar: not that a post-modern Canada would want to fight Hitler. Otherwise, Justin would be on the supply list now.) 

I'll just leave this right here:

Finance Minister Chrystia Freeland’s family farm is auctioning all equipment in a retirement sale organized by Freeland’s father Donald, 76. The finance minister, a millionaire Rhodes Scholar, frequently invoked the farm as proof her family was not part of the “Upper Canada elite.”

I'm sure it's nothing.

Bleed the east:

Already smarting from the shutdown of the Keystone XL pipeline, Canada’s oil industry is now facing the prospect that a long-operating oil line could be shut down.

Michigan Governor Gretchen Whitmer has revoked an easement for Enbridge’s Line 5, which ships oil from Alberta, through the U.S. and onto refineries in southern Ontario, but also several U.S. states.

This has raised concern, not only in oil-producing Alberta, but in Ontario and Quebec.

 

The housing economy will right itself magically, from the heart outwards.

Or something:

Rosenberg said, “This might be one of the biggest bubbles of all time,” in remarks that followed the Bank of Canada announcing interest rates would be kept at 0.25%, “Of course, it’s been predicated on where mortgage rates are.”

As noted by BNN Bloomberg, Rosenberg pointed out the disparity  between the lack of wage growth, and the surge of housing prices:

“Rosenberg noted that a key national home price has experienced double-digit gains with virtually no wage growth to help Canadians keep pace. He described the relationship between income and home prices in Canada today as resembling the disparity between incomes and tech stocks during the dot-com boom-and-bust cycle.”

“I’m pretty wary certainly about the valuations in residential real estate. Would I be going out and buying a home today as an investment in Canada or in the [Greater Toronto Area]? Absolutely not. I would just as soon go in the stock market.”

Inflation?:

Despite a massive surge in debt, huge budget deficits, and a rapid increase in the money supply, inflation is staying under control.

At least, that’s what the government is telling us.

But does that fit with what we are seeing all around us?

Do food prices seem stable?

How about the housing market, which continues to behave in absurd ways?

Does anyone actually feel like things are staying affordable?

 

They are not.

Watch the decline.