Canada Capitalizing on US Debt

[msj]

And what makes you think I want Canada to buy the asset for less than the predicted discounted future cash flows? You're just arguing for the sake of arguing. I specifically asked in my first post how much it would cost to acquire a Caribbean island and how we could go about making it a productive asset (by making it a tax haven for wealthy Americans). You're going in circles trying to justify why you're arguing. Go away.

Given that taxes in Canada are higher than in the US, even with the "Buffet tax," I won't be going anywhere.

You do realize that Canada can't afford to be issuing tax cuts, right?

You do realize that we have a CPC government that, presumably, would prefer to give out tax cuts, right?

You do realize that if we made any island into a Canadian province that there would be costs, right?

The entire premise of your OP is, frankly, preposterous. And I'm being polite here....

[Smallc]

Well, um, maybe if you read the link you will see that it is about combined debt (federal, provincial).

Ummm, I'm saying that the IMF doesn't agree with the info presented in the article. I agree, reading links is good...and so you should have read mind with the IMF citation.

[Smallc]

You're making the mistaken assumption that economic growth will be just what Slasher Jimmy wants/needs...

Todays IMF report stands in direct contradiction with that line of wishful thinking....

Actually, the IMF report is pretty close to where the budget assumptions where for growth. Anything above 2.2% was considered to be a bonus. Still our current deficit is not that large in a global context, and our credit rating reflects that.

[msj]

Ummm, I'm saying that the IMF doesn't agree with the info presented in the article. I agree, reading links is good...and so you should have read mind with the IMF citation.

Ok, I have gone back and looked.

Where is your link?

Edit to add: my link is using Stats Canada data and US government data and, no, I was not referring to the link within the link to the IMF Outlook.

Edited September 21, 2011 by msj

[Smallc]

Ok, I have gone back and looked.

Where is your link?

Well that's terribly embarrassing. I forgot to put it back when I edited the post:

IMF data

This year, our debt to GDP ratio starts to get better again.

Evidently, these things are difficult to measure in an exact way. Still, Canada doesn't seem to be in any danger.

Edited September 21, 2011 by Smallc

[msj]

Well that's terribly embarrassing. I forgot to put it back when I edited the post:

IMF data

This year, our debt to GDP ratio starts to get better again.

Evidently, these things are difficult to measure in an exact way. Still, Canada doesn't seem to be in any danger.

I still prefer my link which which looks at Federal and Provincial debt (and State debt for the US).

To ignore the provinces is absurd given how much they can borrow.

But then, it's not exactly clear from that IMF link if we're looking at federal gross debt or all levels of government gross debt so who knows?

[Smallc]

But then, it's not exactly clear from that IMF link if we're looking at federal gross debt or all levels of government gross debt so who knows?

They are different entities though. It isn't the same as the states.

Edited September 21, 2011 by Smallc

[Smallc]

It appears though, that we are looking at total debt in the IMF numbers as well:

http://blog.scott.tylers.info/index.php?/archives/49-Provincial-Debt-Table.html

[msj]

It appears though, that we are looking at total debt in the IMF numbers as well:

http://blog.scott.tylers.info/index.php?/archives/49-Provincial-Debt-Table.html

Those numbers are a bit old.

I'll take Ben's numbers over what you have provided as he is reputable, he is a Canadian source and an economist that I trust.

As for looking at total government debt - you better believe it is relevant to look at total government debt from all levels of government - there is only one taxpayer.

While I hate that expression - there's only one taxpayer - this time it really does apply.

[msj]

They are different entities though. It isn't the same as the states.

Which is why my link includes the US Federal/State/Local government debt.

And also why the Canada number is for Canada Federal/Provincial government debt.

It is closer to being an apples to apples comparison this way.

[Smallc]

Which is why my link includes the US Federal/State/Local government debt.

And also why the Canada number is for Canada Federal/Provincial government debt.

It is closer to being an apples to apples comparison this way.

It isn't though, because US states can't hold debt the same way. Even the stupid debt clock has gross federal government debt at just under $600B. That's also nearly the figure used by the Department of Finance. That doesn't sound like 80% to me. It's obvious that the total debt number is extremely hard to measure, but that it's unlikely that it's over 100%. Canada's public finances are in far better shape than those of many other western democracies. The deficits will be gone eventually.

Edited September 21, 2011 by Smallc

[Smallc]

That's not to say that we don't need to be vigilant.

[CPCFTW]

Given that taxes in Canada are higher than in the US, even with the "Buffet tax," I won't be going anywhere.

You do realize that Canada can't afford to be issuing tax cuts, right?

You do realize that we have a CPC government that, presumably, would prefer to give out tax cuts, right?

You do realize that if we made any island into a Canadian province that there would be costs, right?

The entire premise of your OP is, frankly, preposterous. And I'm being polite here....

You mean my post about buying a caribbean island from the US is proposterous? Thanks for pointing that out for us. You've made us all a little wiser today. Good work!

[msj]

It isn't though, because US states can't hold debt the same way. Even the stupid debt clock has gross federal government debt at just under $600B. That's also nearly the figure used by the Department of Finance. That doesn't sound like 80% to me. It's obvious that the total debt number is extremely hard to measure, but that it's unlikely that it's over 100%. Canada's public finances are in far better shape than those of many other western democracies. The deficits will be gone eventually.

That's the point! Because our provinces do get into debt and their states don't get into much debt we need to look at debt at all levels of government to understand the total burden on taxpayers.

I would also caution about looking at gross debt versus net debt.

As for Canada, well, here's an old link looking at Canada's total gross debt versus the PIIGS.

Yes, I really do think Canadians have blinders on and so many of us just don't realize that we are really quite indebted - publicly and privately.

Edited September 21, 2011 by msj

[Smallc]

Yes, we do have a great deal of private debt, but almost any other public figures I've ever seen don't match those in the article. There's also the reality that our debt situation is stable, while many countries are currently running deficits of 10% of GDP or more. We aren't and we aren't going to be.

Either that, or all the credit rating agencies have blinders on.

Edited September 21, 2011 by Smallc

[msj]

Yes, we do have a great deal of private debt, but almost any other public figures I've ever seen don't match those in the article. There's also the reality that our debt situation is stable, while many countries are currently running deficits of 10% of GDP or more. We aren't and we aren't going to be.

If Canada's debt/RE bubble implodes even a little then we will be looking at deficits of 5%+ of GDP (and I'm just talking federal here).

Knock on wood that it doesn't happen here - but it could.

If you have links to other data I'd be happy to take a look at it.

Either that, or all the credit rating agencies have blinders on.

Well, if you have read The Big Short by Michael Lewis and/or read Barry Ritholtz over at the big picture blog then you know that the rating agencies have seriously flawed business models and practices.

But that's another topic.

Edited September 21, 2011 by msj

[Smallc]

The ratings agencies are paid for ratings of private companies. The way they rate countries isn't the same at all. I haven't really hard anyone who's worried about Canada's current or future debt positions outside of a few internet forums. Maybe you're right, but there don't seem to be many people dining alarms about this country.

Edited September 21, 2011 by Smallc

[TimG]

I haven't really hard anyone who's worried about Canada's current or future debt positions outside of a few internet forums.

It is because it is all a confidence game. As long as people have no worries there is no problem because governments and companies can raise the money they need when they need it. If something disrupts that confidence then suddenly governments and companies can't raise the money they need which precipitates a crises and a hypothetical problem becomes a self fulling prophesy.

MSJ's numbers are pretty scary and say if something goes bad for the Canadian economy it could spiral out of control really quickly.

Edited September 21, 2011 by TimG

[msj]

The ratings agencies are paid for ratings of private companies. The way they rate countries isn't the same at all. I haven't really hard anyone who's worried about Canada's current or future debt positions outside of a few internet forums. Maybe you're right, but there don't seem to be many people dining alarms about this country.

Given the fiasco with the adjustment to the US rating I just don't place much faith in them at all.

I probably can't find it now but Paul Krugman had a post on his blog probably about a month or so ago about how poor the rating agencies have been at downgrading debt for countries.

I think Argentina had already started the default process by the time the rating agencies finally got around to downgrading their debt back in the early part of this century.

It really is laughable and shows just how much of this is based on psychology and myth-making rather than actual facts.

[Topaz]

Who's going to buy those products? How would Canadian labour compete with labour in the third world? Would you lower them minium wage to something completive like $1 an hour?

What I'm talking about doesn't come from the Third World. Have you ever watched the program "Cool Tools"? Most of the drills, snowblowers, lawnmowers, saws, all that construction and lawncare items are made in the USA. There's no reason we couldn't make it here and the same people who buy those items now in Canada, would buy them. At one time, everything you could buy for your home was made in Canada, mostly in Ontario.