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Are CPP funds at risk?


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The Canada Pension Plan Investment Board says recent volatility on the stock markets has ebbed away the fund's assets.

But the CPP board says the fund is designed to withstand the kinds of short-term market fluctuations that trouble many Canadian investors.

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What does this mean exactly - "short term market fluctuations"? Or rather, on one hand, the savings have "ebbed away" and yet on the other hand, the fund claims to have avoided the problems of small investors. I'll think about the "ebbed away" idea.

IMV, too many Canadians (usually left wing) trust the State blindly. These left wingers believe that corporations are dishonest but the idea that the State is dishonest has never crossed their mind. To these NDP/Liberal left wingers, what if the State is just another corporation? What if the State is just a another corporation with a better PR department?

Your claims to give more power to the State amount to a different way to choose a corporation.

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I'm neither a Libertarian nor a Corporatist but I'm surprised sometimes by the naivety of my fellow citizens. I object to letting the State tax my earnings in the name of a pension fund and then letting State bureaucrats decide how to invest my savings. IMV, government bureaucrats cannot pick winners.

Edited by August1991
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What does this mean exactly - "short term market fluctuations"? Or rather, on one hand, the savings have "ebbed away" and yet on the other hand, the fund claims to have avoided the problems of small investors. I'll think about the "ebbed away" idea.

IMV, too many Canadians (usually left wing) trust the State blindly. These left wingers believe that corporations are dishonest but the idea that the State is dishonest has never crossed their mind. To these NDP/Liberal left wingers, what if the State is just another corporation? What if the State is just a another corporation with a better PR department?

Your claims to give more power to the State amount to a different way to choose a corporation.

----

I'm neither a Libertarian nor a Corporatist but I'm surprised sometimes by the naivety of my fellow citizens. I object to letting the State tax my earnings in the name of a pension fund and then letting State bureaucrats decide how to invest my savings. IMV, government bureaucrats cannot pick winners.

Not the people I know. Most do not trust the government no matter who is in power. Most people are demanding more openness so that we are aware of what they are up too. In opposition the parties are more than willing to agree with that. As soon as they get in they become secretive.

http://www.thestar.com/News/Canada/article/410909

Edited by independent
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IMV, government bureaucrats cannot pick winners.

Given that the market's solution in the last weeks was to stop lending and let the whole economy crash, you place a lot of faith in the market to pick winners. Somehow the baby out with the bath water doesn't garner much support. The right wing economic and social Darwinism basically says that everything will be fine... after a mass die out.

The CPP has been hurt but a small percentage of their portfolio is in the market. Moreover, they are big enough to make the same type of investments in today's market that will pay off later on. As Harper suggests, there are opportunities out there now.

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IMV, too many Canadians (usually left wing) trust the State blindly. These left wingers believe that corporations are dishonest but the idea that the State is dishonest has never crossed their mind. To these NDP/Liberal left wingers, what if the State is just another corporation? What if the State is just a another corporation with a better PR department?

IMV, many people (usually right wing) distrust the state rather blindly. Nearly the entire market is down. I really don't know what you expected to happen.

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Given that the market's solution in the last weeks was to stop lending and let the whole economy crash, you place a lot of faith in the market to pick winners.

Jdobbin you argue like a child. You contradict yourself so much it's not even funny. You complain and complain about the financial crisis and you whine about how Harper is somehow magically the cause of it, yet Canadian federal monetary policy has PROVEN itself the best in the world. Given that the natural caution of the Canadian Banks has almost entirely sheltered us from a collapse of banking systems seen almost EVERYWHERE else in the world, I find it hilarious that now you're trying to argue against their tightening up of lending guidelines.

You're so completely and totally ignorant of both how the economy works and how foolish you make yourself look with arguments that contradict each other, I don't even know what to say to you anymore.

There are some really blind posters out there but at least you can understand how and why they feel the way they do. I understand a low wage union member voting NDP because it's in their best interest to. I understand Greenthumb's hate for the Tories given his position on legalizing drugs. You on the other hand, I can't even begin to understand.

You criticize Harper on spending yet the Martin Liberals spent 95% as much AND the Dion Liberals are proposing to increase spending by a GREAT DEAL MORE.

You criticize Harper for the financial crisis yet you cannot come up with a SINGLE specific criticism of what he's done to make it worse and you ignore the fact that we're better off right now than everyone else. You then go ahead and criticize the banks for exhibiting the natural caution that has SAVED them from a banking collapse!

Plugging your ears, closing your eyes and humming loudly does NOT make you right! Try for a change to allow what some of us are writing to actually sink in!

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Jdobbin you argue like a child. You contradict yourself so much it's not even funny. You complain and complain about the financial crisis and you whine about how Harper is somehow magically the cause of it, yet Canadian federal monetary policy has PROVEN itself the best in the world. Given that the natural caution of the Canadian Banks has almost entirely sheltered us from a collapse of banking systems seen almost EVERYWHERE else in the world, I find it hilarious that now you're trying to argue against their tightening up of lending guidelines.

You're so completely and totally ignorant of both how the economy works and how foolish you make yourself look with arguments that contradict each other, I don't even know what to say to you anymore.

There are some really blind posters out there but at least you can understand how and why they feel the way they do. I understand a low wage union member voting NDP because it's in their best interest to. I understand Greenthumb's hate for the Tories given his position on legalizing drugs. You on the other hand, I can't even begin to understand.

You criticize Harper on spending yet the Martin Liberals spent 95% as much AND the Dion Liberals are proposing to increase spending by a GREAT DEAL MORE.

You criticize Harper for the financial crisis yet you cannot come up with a SINGLE specific criticism of what he's done to make it worse and you ignore the fact that we're better off right now than everyone else. You then go ahead and criticize the banks for exhibiting the natural caution that has SAVED them from a banking collapse!

Plugging your ears, closing your eyes and humming loudly does NOT make you right! Try for a change to allow what some of us are writing to actually sink in!

The Libs being power for 13 years paid off a 40 BIL debt and has kept it there. The Libs left Harper with a 13 BIL surplus and now Canada has a 2 Bil. surplus, maybe. Harper said he knew this was coming and so he prepared for it, maybe. I know they did some investing in the stock market with the CPP funds just after coming to power. Next year alot of the babyboomers are turning 60 and they will start pulling money from that fund that THEY put there and once they start pulling you don't have those people contributing to the fund. This financial crisis could run for two years off and on. Harper better guard that fund or the Cons will be gone like the PC's were!

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The Libs being power for 13 years paid off a 40 BIL debt and has kept it there. The Libs left Harper with a 13 BIL surplus and now Canada has a 2 Bil. surplus, maybe. Harper said he knew this was coming and so he prepared for it, maybe. I know they did some investing in the stock market with the CPP funds just after coming to power. Next year alot of the babyboomers are turning 60 and they will start pulling money from that fund that THEY put there and once they start pulling you don't have those people contributing to the fund. This financial crisis could run for two years off and on. Harper better guard that fund or the Cons will be gone like the PC's were!

The CPC has paid off $40b in debt in 2 years.

By definition a surplus is inefficient and means we are overtaxed.

I think we need to send the lefty sympathizers here to an economics refresher course.

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Isn't that what Harper was doing up until his flip-flop on the economy?

From the Toronto Star, January 1 2008:

McCallum accused Harper of sending a confusing message to consumers by combining talk of a tax cut with a warning the economy could be headed for trouble.

"This is clearly a triumph of gimmickry over good public policy to announce the GST cut in a store and tell us the cupboard is bare," said McCallum.

"I think they're trying to downplay expectations and then people will be positively surprised."

With the U.S. economy weakening because of a sub-prime mortgage crisis that is hurting the housing sector – and risks that slower demand south of the border could hurt exports of Canadian-made goods – Harper and Flaherty have been telegraphing that they'll have less room to manoeuvre in the federal budget.

Harper said his plan is to "shelter, as best we can, Canadians from any fallout of global economic problems."

McCallum said the government is overstating the risks because many experts expect the Canadian economy to grow by up to 2.5 per cent this year, which would leave room for spending and tax initiatives.

(emphasis mine)

http://www.thestar.com/News/Canada/article/290192

“Harper ready to give us the squeeze. Tells Canadians to tighten their belts as U.S. financial collapse looms” (Ottawa Sun, December 21, 2007).

“In CTV's year-end interview with Prime Minister Stephen Harper, he says he's concerned about the slowdown in the American economy and how it could impact businesses north of the border” (Canadian Press, December 20, 2007).

“After almost two years of ‘don't worry, be happy’, the PM has been raising a caution flag, if not an alarm, about the Canadian economy in the year ahead. ‘I think 2008 will be a more challenging year for the country and for the government,’ he predicted during a recent chat with us at 24 Sussex Dr.” (Greg Weston. Whitehouse Star, December 31, 2007).

“Harper said he'll be keeping watch on the looming storm on Canada's economic horizon. ‘We know there is considerable uncertainty in the world economy, in the American economy, and we've seen very strong performance from our economy so far,’ he said Monday. ‘So obviously, our wish for the year is we're able to sustain that momentum and shelter as best we can Canadians from any fallout of global economic problems’” (Canadian Press, December 31, 2007).

Robert Fife: As the Prime Minister sat down with CTV to reflect on the past year, he has worries about the next. Top of mind, a threatening downturn in the American economy that will be felt north of the border.

Stephen Harper: I believe that 2008 is likely to be a challenging year in terms of the economy… There's no way we can be completely insulated from what's going on in the United States or in the global economy (CTV National News, December 20, 2007).

“NDP leader Jack Layton accused Mr. Harper of trying to ‘create a climate of fear’ to justify government plans for the economy, as he said the government has done to gain support for the war in Afghanistan and to avoid joining the global fight against climate change. ‘If the economy is getting into some trouble and the government's finances are in some trouble, it's because Mr. Harper has paid no attention to that issue (climate change) at all,’ Mr. Layton said, adding that his party will continue to vote against the government on no-confidence motions” (Ottawa Citizen, December 24, 2007).

Jack Layton: “Well I think he is trying to create a climate of fear, and, you know, that's been his approach unfortunately on some issues, whether it was the way in which we have gone to war in Afghanistan” (CTV, Question Period, December 23, 2007).

Dion and the Liberals dismissed the looming signs that the economy would suffer greatly. All the while Harper was monitoring events and taking steps to solidify our financial position and steer Canada over the bumps. They accused Harper of creating a climate of fear just as Harper was cautioning Canadians of the coming economic storm, then one year later they turn around by doing what they accused Harper of doing.

The flip flop was performed by the Liberals, not the Conservatives.

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Sure it is. A budget should be balanced. If we're in deficit, it means we've spent more than we've earned. If we're in surplus, it means we've earned more than we've spent.

Doesn't say anything about being overtaxed or inefficient. Not saying I don't like tax breaks, so long as they don't result in service cuts.

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Doesn't say anything about being overtaxed or inefficient. Not saying I don't like tax breaks, so long as they don't result in service cuts.

The government's money is OUR money. So any time they make more money than they spend, whether it be on social programs or debt payments or whatever, we should get it back.

There is no glory in overtaxing citizens.

Edited by Jobu
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The government's money is OUR money. So any time they make more money than they spend, whether it be on social programs or debt payments or whatever, we should get it back.

They should use it as they have been, to reduce our debt, so that we can have lower taxes, balanced books, and strong programs spending.

Edited by Smallc
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They should use it as they have been, to reduce our debt, so that we can have lower taxes, balanced books, and strong programs spending.

So why did the LPC run $10b+ surpluses? Why not use that $ to pay down even more debt?

You have to strike an even balance between spending and debt-repayment. A prudent approach is to limit spending to necessary areas, pay down high-interest debt, and have moderate to low taxes. You can't just pick one area in the abstract.

Any way you look at it, there should not be substantial surplus.

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The debt is the millstone around our necks, of that there is no doubt. Every single penny of surplus should go toward debt reduction. Even so that is not enough, what needs to happen is that the government actually plan a debt reduction strategy that would see revenue injected on a regular and planned basis over and above the scheduled payments required. It is not nearly enough to simply make the payments if you desire to shorten the period of indebtedness you must make alternative arrangements that exceed the payment schedule. Any child in high school can understand this and yet the government cannot seem to grasp the concept.

Debt obstructs society's ability to deliver improvements by means of democratic selection. It takes money to do things and if you are in debt you don't buy stuff you cannot afford.

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So why did the LPC run $10b+ surpluses? Why not use that $ to pay down even more debt?

It is a good question, and possibly one of their few economic mistakes. The excuse that they do have though, is that they were attempting to restore funding that they were forced to cut in order to balance the books and cut taxes.

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The debt is the millstone around our necks, of that there is no doubt. Every single penny of surplus should go toward debt reduction. Even so that is not enough, what needs to happen is that the government actually plan a debt reduction strategy that would see revenue injected on a regular and planned basis over and above the scheduled payments required. It is not nearly enough to simply make the payments if you desire to shorten the period of indebtedness you must make alternative arrangements that exceed the payment schedule. Any child in high school can understand this and yet the government cannot seem to grasp the concept.

Debt obstructs society's ability to deliver improvements by means of democratic selection. It takes money to do things and if you are in debt you don't buy stuff you cannot afford.

So by that logic do you recommend that we increase taxes 10% to repay the debt faster?

Debt is not the only issue. Higher taxes results in less jobs and less businesses, which means less tax revenue and a need for even higher taxes. An equilibrium must be struck.

You are right, debt should be reduced. But it has been reduced over time, both by the LPC and the CPC. It is being reduced materially, responsibility and prudently.

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It is a good question, and possibly one of their few economic mistakes. The excuse that they do have though, is that they were attempting to restore funding that they were forced to cut in order to balance the books and cut taxes.

I don't have any problem with the economic record of the LPC under Chretien and Martin. I didn't have any problem with much else about the LPC when they were a fiscally conservative, socially liberal centrist party. Their problems were scandal and entitlement over the years.

The LPC is not what they once were.

Trudeau is another story, and Dion would be an even bigger disaster. His "team" includes Bob Rae and Ujjal Dosanjh. That's some scary stuff.

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So by that logic do you recommend that we increase taxes 10% to repay the debt faster?

Debt is not the only issue. Higher taxes results in less jobs and less businesses, which means less tax revenue and a need for even higher taxes. An equilibrium must be struck.

You are right, debt should be reduced. But it has been reduced over time, both by the LPC and the CPC. It is being reduced materially, responsibility and prudently.

Debt is the issue that overshadows everything else. Increasing taxation is the last thing that needs to be done, not the first. All program spending, every dime of our money needs to be looked at IN FULL VIEW OF THE PUBLIC. This is our money we are talking about here! The government is a servant of the people, they must obey the will of the people.

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Banks don't need help, Harper says

Ruling out bailout ideas, PM cites report lauding the Canadian system

(Oct 10, 2008 04:30 AM )

The Star

Feds buy $25B in mortgages

Oct 10, 2008 09:55 AM

The Star

Flaherty

said the mortgage pools the government is taking off the banks' books are already insured by the government.

In fact, he said the government stands to make a small profit from the mortgages because government borrowing costs are lower than what the assets will yield in interest.

...so the Canadian government is borrowing $25 billion dollars to buy up mortgages held by the banks...and the government is doing so because the Canadian banks are the most solid banks in the world!

Why not just lend the banks 25 billion dollars at cost? They are certainly good for it arn't they? Whats the need for the transaction of mortgages for money?

Edited by Peter F
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