Federal government will run a $34-billion deficit in 2009?

Moonbox · January 25, 2009

That's not really at all what I confirmed. What I confirmed is that intelligent people who make it their business to understand the market and the economy will generally do a LOT better than unintelligent and ignorant people.

A lot of 'rich' people lost a LOT of money as well.

I didn't steal anything from anyone, nor am I rich. I'm simply educated in economics and finances. Of course people who don't have a clue what's going on will conclude that someone 'stole' from them when their investments go down 30-40%, but perhaps part of the problem was that these people:

A ) Don't understand what they're investing in or what the risks are,

AND/OR

B ) Don't pay attention to the market or their investments.

It's their own fault in large because although their broker or FI sold them the investments, it's not really their job to hold the client's hand and teach them step by step how the economy works.

I feel bad for some of the retirees who are going to have to go back to work because their investments tanked, but at the same time I have to shake my head at how stupid it was to have your life savings, which you cannot afford to lose, in an aggressive and risky investment portfolio. DUhH!?

Edited January 25, 2009 by Moonbox

madmax · January 27, 2009

I feel bad for some of the retirees who are going to have to go back to work because their investments tanked, but at the same time I have to shake my head at how stupid it was to have your life savings, which you cannot afford to lose, in an aggressive and risky investment portfolio. DUhH!?

All the old people had their money in Risky Investment Portfolios.... And you can anticipate stock market crashes. Lots of stupid people, and you are the shining star.

Thanks for your comments.

Moonbox · January 27, 2009

Madmax unfortunately for you sarcasm and what you perceive as wit don't make up for ignorance and a complete lack of understanding of the topics at hand...

2) My view is the let the US continue to run the Right Wing deficit spending of the Bush era, including there massive stimulus plan, because they will control their borders in the Global economy. When it is time to protect industry and jobs, they can and will do it. The CPC spending will not protect any jobs, or industries, anymore then their tax cuts protect jobs and industry.

Okay so...American stimulus is okay because they can control their borders? Canadian stimulus is bad because we can't? The borders really have nothing to do with stimulus and deficits, nevermind the fact that Canada CAN control its border just as effectively as the US can. We're also ignoring the fact that when the US runs massive deficits, their currency depreciates, which hurts our export market because the Canadian dollar will cost more. Part of the reason Canada HAS to spend is to make sure Canadian exports remain competitive.

You need an industrial policy before any of those measures will work. Thus tax cuts or stimulus could work, but only with a plan.

Uh huh...and I suppose your plan will be to come up with a plan right? Initiate the 50 day plan so that you have a plan that will be a good plan right? Yeah. I thought so.

madmax · January 28, 2009

Canada HAS to spend is to make sure Canadian exports remain competitive.

Moonbox · January 28, 2009

If all you can pull off is childish emoticons you really show what your arguments are worth.

You can't refute what I said because you don't understand the first thing about the economy. Way to talk out of your butt. :blink:

Argus · January 28, 2009

You've just demonstrated exactly how the economy doesn't work, a popular misconception. It isn't like a big bank account with billions of dollars in there, it just doesn't work that way, which you've failed to realize.

But he's not talking about an economy. He's talking about the indisputable fact that the more debt we add to our debt load the higher the annual debt servicing (interest) costs will be.

Argus · January 28, 2009

I feel bad for some of the retirees who are going to have to go back to work because their investments tanked, but at the same time I have to shake my head at how stupid it was to have your life savings, which you cannot afford to lose, in an aggressive and risky investment portfolio. DUhH!?

Hey, I was fairly conservative, but even my blue chip finance stocks have dropped 30% or more. It wasn't too long ago investing in Nortel was considered conservative.

Moonbox · January 28, 2009

'Fairly conservative' means nothing unless you have a basis of comparison.

Conservative for a wealthy retiree might be blue chip equity. For a retiree whose savings might just BARELY give them the income they want it would likely be a lot less equity based. Conservative for someone who can barely afford their rent payments might be nothing scarier than GICs.

It all depends on much you understand, how much you can safely lose without your lifestyle suffering and how long of a time horizon you have.

Blue chip stocks are by no means a safe investment. They are SAFER than a tech, bio or energy fund in general but even the best and biggest blue chips have giant value fluctuations. Look at GM.

madmax · January 28, 2009

If all you can pull off is childish emoticons you really show what your arguments are worth.
You can't refute what I said because you don't understand the first thing about the economy. Way to talk out of your butt.

Explain why Canada has to spend to maintain a competitive export market? Please include as much as information as possible on how this spending works. Maybe you can change the rolled eyes and frowns into a smile.

capricorn · January 28, 2009

It all depends on much you understand, how much you can safely lose without your lifestyle suffering and how long of a time horizon you have.

I agree with you moonbox. In my case, I knew next to nothing about how stocks work. I was 55 when I retired. So, I placed all my retirement funds into a GIC Life Income Fund and slept soundly, grateful for each morning I wake up to live another day. Man, when the stocks tanked I was thrilled my capital was not affected. Others were not so fortunate and in many cases it was their own fault.

Moonbox · January 28, 2009

Explain why Canada has to spend to maintain a competitive export market? Please include as much as information as possible on how this spending works. Maybe you can change the rolled eyes and frowns into a smile.

I already did.

First off, the spending is obvious stimulus and will help prop up otherwise failing manufacturers. This you understand already I'm sure.

Second, which I've already explained, the spending is tied directly with monetary policy. When you run massive deficits like the US and EVERY other western nation basically is doing right now, it causes inflationary fears. Deficits like in the USA are NOT going to get paid off easily and the best way to make sure your government can manage the debt is to start printing money and keep interest rates low.

When you start printing money, the value of money already in circulation decreases. This causes the currency to fall in comparison to other currencies. This doesn't happen immediately, but you'll see inflation rates fly in the next couple of years.

To relate that back to exports, we all know that a cheap currency makes your export goods cheaper. I assume you also know that the Canadian dollar trading at par with the US dollar put a lot of manufacturers right out of business this year. IF the Canadian government DOESN'T put some inflationary pressure on our dollar over the next few years we'll all of the sudden see it trading over the US dollar and the US will import things cheaper from other countries.

That's the basic idea at least.

Edited January 28, 2009 by Moonbox

Moonbox · January 28, 2009

I agree with you moonbox. In my case, I knew next to nothing about how stocks work. I was 55 when I retired. So, I placed all my retirement funds into a GIC Life Income Fund and slept soundly, grateful for each morning I wake up to live another day. Man, when the stocks tanked I was thrilled my capital was not affected. Others were not so fortunate and in many cases it was their own fault.

Which is exactly what you should have done. Greed, ignorance and a total lack of common sense sadly did not propel the masses to that sort of simple wisdom.

TD stayed out of the sub prime mess for the simple reason that their CEO and chief economist didn't really understand the deals being in made. If you don't understand and investment, don't put your money into it.

ToadBrother · January 28, 2009

TD stayed out of the sub prime mess for the simple reason that their CEO and chief economist didn't really understand the deals being in made. If you don't understand and investment, don't put your money into it.

Just imagine if a lot of the banks and investment firms had followed that bit of wisdom. We wouldn't be here at all.

madmax · January 28, 2009

First off, the spending is obvious stimulus and will help prop up otherwise failing manufacturers. This you understand already I'm sure.

I would like you to explain this in greater detail. Coming from this sector and still working in much of it, dedicated to closures, I would rather you flesh it out a little deeper.

To relate that back to exports, we all know that a cheap currency makes your export goods cheaper. I assume you also know that the Canadian dollar trading at par with the US dollar put a lot of manufacturers right out of business this year. IF the Canadian government DOESN'T put some inflationary pressure on our dollar over the next few years we'll all of the sudden see it trading over the US dollar and the US will import things cheaper from other countries.

Your theories are solid, traditional and basic. Unfortuneately, you have to drop the textbook and do some digging as to what is really happening within the manufacturing.

That's the basic idea at least.

Yup, thanks.

In the meantime, I bounce between Grant Thorton LLP and KPMG dealing with Industrial "Bankruptcies" among other things.

Moonbox · January 29, 2009

I would like you to explain this in greater detail. Coming from this sector and still working in much of it, dedicated to closures, I would rather you flesh it out a little deeper.

Why would I explain it? If you understood what I said about inflation etc you more than likely already know what Keynesian Theory is and I'd be wasting my breath. The debate of how much money we need to pump into the economy is way up in the air. The size of the deficits being projected are absolutely staggering from my point of view but it looks like it was going to happen regardless of who was in power.

Your theories are solid, traditional and basic. Unfortuneately, you have to drop the textbook and do some digging as to what is really happening within the manufacturing.

I went basic on you 'assuming' (yeah I know) that you might not even have Economics 101 under your belt. Since apparently you're in the 'sector' (whatever that means), maybe you could clarify what your points of contention are? Are we talking about idiotic lending practises in the US? Unsustainable auto manufacturing and over-capacity? Foolish and manipulative futures trading (oil)? Massive scale financial fraud and lousy accounting? Give us a place to start, because I'd love to debate with someone outside of my immediate circle who actually knows something about it.

In the meantime, I bounce between Grant Thorton LLP and KPMG dealing with Industrial "Bankruptcies" among other things.

Lawyer?

madmax · January 29, 2009

The size of the deficits being projected are absolutely staggering from my point of view

And you know well enough that this deficit (Large as it is) is not going to produce the conditions you described earlier. I sense your hesitation, and I believe that you are sucking up this budget and not because you believe in it.

I went basic on you 'assuming' (yeah I know) that you might not even have Economics 101 under your belt. Since apparently you're in the 'sector' (whatever that means), maybe you could clarify what your points of contention are? Are we talking about idiotic lending practises in the US? Unsustainable auto manufacturing and over-capacity? Foolish and manipulative futures trading (oil)? Massive scale financial fraud and lousy accounting? Give us a place to start, because I'd love to debate with someone outside of my immediate circle who actually knows something about it.

You are winning me over. That is one hell of a list...

(Yeah I know) too, do it myself sometimes. I will let you rest with those topics. I don't think there is much to debate over, but lots to highlight. I think you hit many things and all I could do would be add some other questionable practices to the list, merely to add to a bad dream.

Lawyer?

Erm,,, No.... I must have really ticked you off. :angry:

At least you didn't think I was involved in insurance. Then I would have to take offense.

Moonbox · January 30, 2009

And you know well enough that this deficit (Large as it is) is not going to produce the conditions you described earlier. I sense your hesitation, and I believe that you are sucking up this budget and not because you believe in it.

You're absolutely right. The budget is a hard pill to swallow. I was expecting deficits of maybe $10B. $30B seems outrageous to me. I think the US deficit is even more so. Either way, whether it was CPC or coalition stimulus, we were going to see $30+ billion of it. I think this is a classic example of stabilization policy overkill. Somehow the whole world has decided to make the same mistake.

When I support Harper's stimulus over a coalition's similar spending, I do so only insofar as I directly benefit from it more. It's pretty much assured that nothing the Bloc or NDP propose is going to do me any good so I'll take the tax cuts, however temporary they may be.

Erm,,, No.... I must have really ticked you off. :angry:
At least you didn't think I was involved in insurance. Then I would have to take offense.

Haha no. I only guessed because you mentioned LLP and KPMG. I thought lawyer or accountant might be a good guess. I wasn't implying anything sorry.

Edited January 30, 2009 by Moonbox

Chris in KW · January 30, 2009

You're absolutely right. The budget is a hard pill to swallow. I was expecting deficits of maybe $10B. $30B seems outrageous to me. ....................... I think this is a classic example of stabilization policy overkill. Somehow the whole world has decided to make the same mistake.

Right. On that, I totally agree. I would be ok with a $10B deficit that enables focused, managed, infrastructure spending for 2009. I never attempted to deny that that spending *might* help the economy (though I'm not convinced that our government is capable of spending it in a way that actually helps).

My original point, which I maintain, is that if Harper wants to spend, he should take the responsibility to pay for that spending. At the very least, Harper do not lower taxes while increasing spending.

I'm especially annoyed at the tax cuts for individuals... They add up to what, a few hundred dollars a year on average? Do we really believe (or even hope) that Joe Blow earning 45K a year is going to spend his $400 on anything that stimulates the economy? What he SHOULD be spending it on is lowering his credit card debt....

Moonbox · January 30, 2009

Right. On that, I totally agree. I would be ok with a $10B deficit that enables focused, managed, infrastructure spending for 2009.

i'm okay with some infrastructure spending as well. What my problem with stimulus spending is that our governments seem unable to avoid the useless spending on social programs that end up being perpetually wasted dollars. There are some good ones out there, like EI for example, but a lot of the money is pretty much wasted from an economic perspective.

I'm especially annoyed at the tax cuts for individuals... They add up to what, a few hundred dollars a year on average? Do we really believe (or even hope) that Joe Blow earning 45K a year is going to spend his $400 on anything that stimulates the economy? What he SHOULD be spending it on is lowering his credit card debt....

The reason why tax cuts are a better stimulus item is because it's FAIR. The problem with social spending is that it provides NO real benefits to the vast majority of people. Infrastructure is a little better but it takes longer to take effect (over a year sometimes) and once again, not everyone benefits. A lot of communities don't benefit from huge infrastructure projects because an unproportional amount of that money inevitably ends up being spent near large urban centres. There's a reason why everyone but the Tories do so badly outside of the big cities.

Finally, to assume that nobody is going to spend the extra money they get from tax cuts is just silly. A large portion of people will spend some or all of it. I'd probably be one of them.

Edited January 30, 2009 by Moonbox

Chris in KW · January 30, 2009

The reason why tax cuts are a better stimulus item is because it's FAIR. The problem with social spending is that it provides NO real benefits to the vast majority of people. Infrastructure is a little better but it takes longer to take effect (over a year sometimes) and once again, not everyone benefits. A lot of communities don't benefit from huge infrastructure projects because an unproportional amount of that money inevitably ends up being spent near large urban centres. There's a reason why everyone but the Tories do so badly outside of the big cities.

Hm... I don't agree that that "fair" spending is automatically more effective than "targeted" (or unfair) spending.

I think we should be trying to get the most 'bang for our buck', not trying to be fair. If someone has to move from Wiarton (small town) to Mississauga to find a job that's based on government stimulus, that's life. I also know people who have moved away from larger cities to work in government-backed jobs (eg. Bruce nuclear plant, etc).

I'd argue that building clean powerplants of some kind is an ideal investment for gov't stimulus money. It's not "fair" - it is targeted to one area. However, it generates income, short and long-term jobs. It also generates housebuilding and all kinds of big-ticket spending. It's also something we need to do anyway. I'd much rather spend everyone's personal tax cut on generating jobs like that.

Finally, to assume that nobody is going to spend the extra money they get from tax cuts is just silly. A large portion of people will spend some or all of it. I'd probably be one of them.

I didn't say they wouldn't, I said they shouldn't. But even though consumer spending is a powerful force (which has become almost a truism, so we should question it), I also think that there's quite a bit of consumer spending that doesn't help the economy very effectively. For example, buying a TV at BestBuy? Yes, it keeps a BestBuy store running by providing it a profit margin. But does it really stimulate the Canadian economy?

Worse, if people do the right thing, and pay off their credit cards (and a lot of people say that they will do this) this has NO positive effect on the economy (though it's good for them).

Putting the extra money in an GIC? I would think that this creates little effective stimulus.

I'd rather see some smart folks in Ottawa (I know... that's wishful thinking) put this money to EFFECTIVE use than see it spent "fairly".

Edited January 30, 2009 by Chris in KW

Moonbox · January 30, 2009

Hm... I don't agree that that "fair" spending is automatically more effective than "targeted" (or unfair) spending.

It really depends but I generally agree with you. Something like Bruce Nuclear is obviously providing a benefit for everyone. Other projects, like Go Transit etc, is something the provinces and federal government help pay for that people in Thunder Bay ultimately see little benefit for. There are trickle effects that are a little less obvious but the fact remains that a lot of infrastructure spending and benefits is not distributed in a way that everyone is better off for it.

Putting the extra money in an GIC? I would think that this creates little effective stimulus. .

Interest rates are so low right now that I doubt we'll see a lot of that going on. I work for a bank and I can tell you the majority of GIC's are being cashed in right now instead of the opposite happening.

I'd rather see some smart folks in Ottawa (I know... that's wishful thinking) put this money to EFFECTIVE use than see it spent "fairly".

I think that would be an ideal rather than something we can expect to happen, you're right. That's the problem. We all support infrastructure spending (mostly), it's just there are other ways to stimulate the economy along with that.

madmax · February 4, 2009

Interesting article in todays Globe.

Cancel the Revolution

"Yum, yum! Can I have seconds!" respond 90 per cent of Conservative voters.
Let me repeat that: page 7 of the survey shows that nine in 10 Conservative voters are net positive on the budget. That is waaaay more than the six in 10 Liberals, five in 10 Dippers, four in 10 Greens or three in 10 Blocquistes.

The survey goes on to report that 92 per cent of Conservatives say the budget gave them more confidence in Harper's ability to manage the economy.

And yet stranger..

But get this: New Democrat voters are equally likely as Conservatives to think the deficits are too large! (NDP voters are actually marginally more likely to be concerned about deficits in the survey - 28 per cent NDP to 27 per cent CPC - but that is within the margin of error, and not statistically significant.)

OddSox · February 4, 2009

And yet stranger..

The NDP may be against the deficits but that doesn't mean they would reduce the spending - they would just get the corporate 'fat cats' to pay for it. (at least for now)...

Moonbox · February 4, 2009

I think political partisanship has a lot to do with the survey results.

If the budget was done up by Liberals we'd probably see something like 4/10 Cons like it but 9/10 Liberals did.

If it was NDP we'd see 0/10 Cons liked it and 10/10 dippers did.

waldo · February 4, 2009

Interesting article in todays Globe.
Cancel the Revolution

"Yum, yum! Can I have seconds!" respond 90 per cent of Conservative voters.

Let me repeat that: page 7 of the survey shows that nine in 10 Conservative voters are net positive on the budget. That is waaaay more than the six in 10 Liberals, five in 10 Dippers, four in 10 Greens or three in 10 Blocquistes.

The survey goes on to report that 92 per cent of Conservatives say the budget gave them more confidence in Harper's ability to manage the economy.

nothing new here - move along