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Deficit Dominates Debate In Canada

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Hold on, the Canadian budget deficit is more like 30B, not 200M. It's running at around 3% of GDP. Lots of stuff about it on the web, e.g.:

http://www.financialpost.com/Canada+budget+deficit+increases/3711799/story.html

Having said that, none of the politicians here are saying anything other than that it needs to come down to 0 in a very short time frame. All the arguments are about what to cut (or which taxes to raise) not about the need to do it at all. As LuckyOne says further up the thread, memories of the Canadian debt crisis in the 90s are still fresh here.

...good point ...the £200 million is the projection target for 2014/15..... :unsure:

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Looks like the Canadian deficit is thought to be 40 billion CAD this year. Or 42 billion in USD. This for a nation with a 1.5 trillion USD economy. So just 2.7% of gdp. The national debt of Canada is only 560 billion CAD. Just 37% of gdp. Now that is an AAA rating.

Meanwhile the UK deficit is in USD about 280 billion. And the GDP in USD for the UK is about 2.2 trillion. So over 12% of gdp. And the national debt of the UK is not bad at about 60% of gdp.

When the crisis hit Canada had all the room in the world to stimulus spend and lower interest rates.

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Looks like the Canadian deficit is thought to be 40 billion CAD this year. Or 42 billion in USD. This for a nation with a 1.5 trillion USD economy. So just 2.7% of gdp. The national debt of Canada is only 560 billion CAD. Just 37% of gdp. Now that is an AAA rating.

Meanwhile the UK deficit is in USD about 280 billion. And the GDP in USD for the UK is about 2.2 trillion. So over 12% of gdp. And the national debt of the UK is not bad at about 60% of gdp.

When the crisis hit Canada had all the room in the world to stimulus spend and lower interest rates.

also remember its not just the deficit that is important but the total debt.

you can have a 3% deficit on £400 billion of debt or a 3% deficit on £1trillion of debt. people focus so much on the 3% deficit they totally ignore the damage of the total debt.

that debt mountain just doesnt go away. and it means that on a £500billion UK tax budget each year the government will be paying £43billion in INTEREST alone.

9p of every £1 of your tax goes on paying the interest on debt.

THIS is the key issue that people dont comprehend today - the fact that a low deficit means that you can service the debt, totally neglects the issue that your taxes are going towards servicing the debt rather than actually paying for public services,because the debt mountain is becoming massive.

Edited by mfp123

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A British person understanding Canada is like a Richard branson selling diet coke in America. Pointless thread

Too damn right. The posters on this thread making out that Canada is a veritable 'financial nirvana' also don't seem to be aware of he effects of provincial level debt. Not to mention the tripple whammy of municipal debt in the case of places like Montreal, Toronto and Vancouver.

Edited by Norma Lamont

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Expansion of the monetary base as a result of the effects of FRB from private sector borrowing.

Those who make the decision to borrow in private sector borrowing are responsible for paying it back and bear the consequences of failure to repay. Public sector borrowing is undemocratic at a very granular level and those who make the undemocratic decisions to borrow bear no responsibility for repayment.

There are some who believe that private and public sector borrowing are completely fungible. I disagree because of the differences in choice to borrow and responsibility to repay.

....I kinda agree, it is easier to spend and waste money that is not yours or your responsibility to pay back, maybe the public sector and the investment banks have something in common after all. ;)

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also remember its not just the deficit that is important but the total debt.

you can have a 3% deficit on £400 billion of debt or a 3% deficit on £1trillion of debt. people focus so much on the 3% deficit they totally ignore the damage of the total debt.

that debt mountain just doesnt go away. and it means that on a £500billion UK tax budget each year the government will be paying £43billion in INTEREST alone.

9p of every £1 of your tax goes on paying the interest on debt.

THIS is the key issue that people dont comprehend today - the fact that a low deficit means that you can service the debt, totally neglects the issue that your taxes are going towards servicing the debt rather than actually paying for public services,because the debt mountain is becoming massive.

One of the big advantages of the printing £175 billion and buying the national bonds with it, was it didn't increase the outflow of interest payment. The interest goes to the BoE, which then remits the interest as a dividend to HM Treasury.

Overall I agree with you, you have to look at the total amount of debt. Probably the political focus is on the annual deficit, because that is all that can be affected in the short run. To bring down the national debt as Canada did requires holding the national debt steady and allowing nominal gdp growth over time to make it relatively smaller.

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Haven't read this thread, but have read the BBC article.

According to the CIA website: % debt.

86 Canada

34.00 2010 est.

A google search of 'National debt Canada' produces....................

'The debt of Canada's federal government will reach 562.9 billion Canadian dollars early Friday morning, according to the Canadian Taxpayers Federation, a citizens' group that opposes deficit spending.'

etc.

From the BBC

'Last month, the Conservative Party projected the Canadian government's budget deficit would decline to 300 million Canadian dollars ($313m; £191.96m) by the 2014-2015 fiscal year.'

Maybe they really are running a balanced book - still with high enough total debt, though.

Yeah, I know.................. DEBT not DEFICIT.

Edited by ZeroSumGame

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I'm sure we had a prior conversation where you told me you weren't a fan of a finite standardised exchange?

No, I'm in favour of good promises and finite means of excgange. My disagreement with yourself has always been over your glee that fiat will fall over and make your gold useful when in fact the downsides will overwhelm any expected uses for it.

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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