Federal Budget 2015

[poochy]

You're correct that I don't make the "median" income in this country, but I'm also the kind of person that doesn't take vacations and concentrated on paying off my debts. Being debt-free allows people to do silly things - like invest in TFSAs and such. If I wanted the bigger $600k+ house and the ridiculous car payments and $10k vacations every year, I'd be in the same mess as everyone else.

My retirement is looked after, but there are so many of you that begrudge that fact and the fact that I plan on getting my kids off to the same start.

You don't need to be "rich" to be a smart money manager. You just need a little self control.

(by the way, the "median income" in Alberta for 2012 was $94,460 so if you can't save a little when you're making that, it's your own damn fault)

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htm

We are bad people for working hard and doing well, that's all. Jealousy is a terrible thing.

[Hydraboss]

We are bad people for working hard and doing well, that's all. Jealousy is a terrible thing.

Exactly. I don't seem to remember anyone "coming to my rescue" while I was working 12-18 hours a day up north seven days a week. I pay more in income taxes than anyone "below the poverty line" makes in a year, so forgive me if I have absolutely no sympathy for those who don't work. Or save. Or buy things they can't afford.

Apparently hard work is something to be looked down upon.

[Smallc]

I do go on vacation a couple of times a year, but I live in an old house and am working very hard to pay off my debts (with $8000 paid in the last 4 months alone). Too many people waste far too much money on things that don't even matter.

[On Guard for Thee]

Exactly. I don't seem to remember anyone "coming to my rescue" while I was working 12-18 hours a day up north seven days a week. I pay more in income taxes than anyone "below the poverty line" makes in a year, so forgive me if I have absolutely no sympathy for those who don't work. Or save. Or buy things they can't afford.

Apparently hard work is something to be looked down upon.

Yes and I did exactly the same thing for many years and not only up north but out of the country as well, but I dont get all redneck about it. But that attitude I see is causing a drift away from what the actual complaints are about this budget. Stats show that the TFSA only helps a small number of people who have worked long enough to have spare cash laying around. Nothing to do with how hard you might be working currently.

[eyeball]

My retirement is looked after, but there are so many of you that begrudge that fact and the fact that I plan on getting my kids off to the same start.

I don't begrudge you your success, just the disdain you seem to have for people who haven't accomplished what you have.

What you should be holding a grudge against are the sorts of economic policies that have been driving wages down virtually everywhere else outside of the la-la land of the oil patch. There's a reason only 8% of Canadians will be able to take advantage of changes to TFSA's.

It would be interesting to see a map that displays a regional breakdown of TFSA investors and everyone else.

[dre]

I don't believe anyone supports social programs for that purpose.

Except everyone that understands the purpose. These programs are not charity... they are there to benefit society as a whole and foster political stability... everyone with even a vague understanding of social democracies and how they came to be understands that. The wealthy benefit from these programs as much as anyone else.

Not at all. For most of Canada's history, to say nothing of the UK before that, the poor were gven nothing, and were entirely responsible for taking care of their own needs. There was no revolution, no rush to Communism, and no threat to property rights of the 'ownership class'. It's only been since the sixties that we started creating these big, universal social programs, not out of fear but obligation.

First of all... your account of the UK is wrong. Its true they didnt have the same kind of violent revolutions that we saw in places like France, and Russia, but the failure to provide a baseline standard of living DID cause political instability and the erosion of private property rights. A monied aristocracy was broken with heavy property taxation, and the wealthy lost much of their political power when the House of Lords was stripped of its ability to veto legislation.

Your claim that these programs were created in the 60's is also just wrong. Most of our programs were created following the great depression in the 30's and 40's.

The Unemployment and Social Insurance act was passed in 1935 during the great depression. Low income support (welfare) was implemented in the 40's. The CMHC was created in the 40's. Public healthcare also began in the 40s with the Saskatchewan Hospitalization Act.

[cybercoma]

You're correct that I don't make the "median" income in this country, but I'm also the kind of person that doesn't take vacations and concentrated on paying off my debts. Being debt-free allows people to do silly things - like invest in TFSAs and such. If I wanted the bigger $600k+ house and the ridiculous car payments and $10k vacations every year, I'd be in the same mess as everyone else.

My retirement is looked after, but there are so many of you that begrudge that fact and the fact that I plan on getting my kids off to the same start.

You don't need to be "rich" to be a smart money manager. You just need a little self control.

(by the way, the "median income" in Alberta for 2012 was $94,460 so if you can't save a little when you're making that, it's your own damn fault)

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htm

What does this have to do with anything? All of this came up because I said people who save money aren't spending it, as if that's even an arguable point.

[msj]

compounding mattered when savings account interest rates were 7%+.

Now investing is all about risk, as in how much of your life savings are you willing to lose?

There is always risk.

When GIC rates were 7% inflation was 6%.

When GIC rates are 2% inflation is 1-2%.

Nothing has changed.

If you want to make money then you risk money.

If you don't, then inflation can eat your money while you think you are not taking any risk which, sadly, is what many Canadians do.

[msj]

What does this have to do with anything? All of this came up because I said people who save money aren't spending it, as if that's even an arguable point.

Yes, and people who are spending money are not saving money.

And those who do not save then spend less in the future.

So what?

[cybercoma]

Yes, and people who are spending money are not saving money.

And those who do not save then spend less in the future.

So what?

So with a stagnate economy, creating financial tools that encourage people to save instead of spend is supremely stupid.

[overthere]

If you don't, then inflation can eat your money while you think you are not taking any risk which, sadly, is what many Canadians do.

Is that less costly than taking high risks in financial investments that ordinary have no clue as to what they are doing? Like mutual funds.... with high fees and unclear defintions of the actual risk...

Because that is what many Candians do when they venture outside GICs.

[msj]

So with a stagnate economy, creating financial tools that encourage people to save instead of spend is supremely stupid.

Canada's saving rate has been abysmally low for eons now so it is still unclear where you are headed with this train of thought.

[msj]

Is that less costly than taking high risks in financial investments that ordinary have no clue as to what they are doing? Like mutual funds.... with high fees and unclear defintions of the actual risk...

Because that is what many Candians do when they venture outside GICs.

Hence the need for financial literacy.

You have no idea how high the fees are on a GIC or how low they are on an index ETF fund when you buy it using a discount brokerage.

Educate yourself. Your future should mean enough to you to at least do that.

[GostHacked]

So with a stagnate economy, creating financial tools that encourage people to save instead of spend is supremely stupid.

Why is saving frowned upon?

[cybercoma]

Canada's saving rate has been abysmally low for eons now so it is still unclear where you are headed with this train of thought.

Unclear how? Encouraging people to save in a stagnate economy only further hinders growth. It's pretty simple to understand.

[dre]

Why is saving frowned upon?

Its not... in a micro level. For you as an individual saving is good... But on a macro level its really bad because it starves the economy of money. Paying back debts is even worse because that money dissappears entirely. If everyone starts saving and stops consuming you get a recession or a depression, because so much of our economy is based on domestic consumption.

Thats exactly why interest rates are so low... Low rates mean that the central bank has a bleak outlook on the health of the economy and they are trying to heat it up by dumping a whole pile of new money into the game.

[GostHacked]

That seems to fall apart when many of the products we buy are foreign made. Where is that money going? We have more of a global economy instead of just a Canadian one. A good deal of the products out there are garbage and are really impulse buy items. I am all for spending money, but spend it wisely. If a family can save, then they can spend some of that extra money without going into debt. We continually operate on a credit system hoping our wages are going to cover those future costs. It's no different when you talk about it on the national scale. We are banking on making money in order to pay for the things we need. Debt is not good on a personal level. And there is no damn good reason for debt to exist.

Imagine the choices a nation could make when it is not in debt?

Central banks are a part of that problem of debt. We have accumulated more debt than a decade ago. The banks have no choice to lower their interest rates because they are in debt as well. A bank does not have all that money on hand, neither on it's balance sheet. The banks are not innocent in all of this.

But I guess the real problem is with needing to borrow money from a fun to make up the difference of the budget. We are talking about the federal budget which is paid for by taxes from Canadians. This should raise some questions. Why did they need to dip into the other fund to make up the difference in order to balance the budget? How much of a deficit would that have created? WHY was there a deficit? Where did all the other money go?

I guess the other point I am making is that the government can't save money. They don't know how. So we have a perpetual debt system in place that brings us to where we are now. Since we cannot and never will pay off that debt, what really does that mean for our nation? Are we only ever one budget away from economically failing as a nation? If so, then we need a government that has long term goals instead of redirecting them every 4 years (at minimum)

How much IS all these public trials of people like Duffy costing? Probably more than what he owes via his activities. Is that a wise investment? If Duffy deserves this much attention, then we are missing other really important things. Or maybe, someone is not telling us or trying to distract us from other issues. Throw someone under the bus to save your own ass.

Start thinking of the nation as you would your own finances. Government needs to raise taxes in order to cover the cost. OR it can have some restraint on where it spends money needlessly on projects to nowhere. Not only that Harper has seriously cut back on many public services, meaning the government should have been in a better position this budget. But that is obviously not the case.

[dre]

That seems to fall apart when many of the products we buy are foreign made. Where is that money going? We have more of a global economy instead of just a Canadian one. A good deal of the products out there are garbage and are really impulse buy items. I am all for spending money, but spend it wisely. If a family can save, then they can spend some of that extra money without going into debt. We continually operate on a credit system hoping our wages are going to cover those future costs. It's no different when you talk about it on the national scale. We are banking on making money in order to pay for the things we need. Debt is not good on a personal level. And there is no damn good reason for debt to exist.

Imagine the choices a nation could make when it is not in debt?

Central banks are a part of that problem of debt. We have accumulated more debt than a decade ago. The banks have no choice to lower their interest rates because they are in debt as well. A bank does not have all that money on hand, neither on it's balance sheet. The banks are not innocent in all of this.

But I guess the real problem is with needing to borrow money from a fun to make up the difference of the budget. We are talking about the federal budget which is paid for by taxes from Canadians. This should raise some questions. Why did they need to dip into the other fund to make up the difference in order to balance the budget? How much of a deficit would that have created? WHY was there a deficit? Where did all the other money go?

I guess the other point I am making is that the government can't save money. They don't know how. So we have a perpetual debt system in place that brings us to where we are now. Since we cannot and never will pay off that debt, what really does that mean for our nation? Are we only ever one budget away from economically failing as a nation? If so, then we need a government that has long term goals instead of redirecting them every 4 years (at minimum)

How much IS all these public trials of people like Duffy costing? Probably more than what he owes via his activities. Is that a wise investment? If Duffy deserves this much attention, then we are missing other really important things. Or maybe, someone is not telling us or trying to distract us from other issues. Throw someone under the bus to save your own ass.

Start thinking of the nation as you would your own finances. Government needs to raise taxes in order to cover the cost. OR it can have some restraint on where it spends money needlessly on projects to nowhere. Not only that Harper has seriously cut back on many public services, meaning the government should have been in a better position this budget. But that is obviously not the case.

Im not necessarily defending the system, and I agree with many of the points you made. The system WILL change its just a matter of time... you have to remember that the current debt based money system is really only 42 years old, and we can only keep doing this for a finite ammount of time until exchange rates adjust and we can no longer afford goods made by foreigners.

What most people think of is "globalism" is the massive flow of goods from east to west with only bits of paper and electronic money going in the other direction. People think its some kind of new world order, but the reality is its a temporary phenomenon that is the result of a currency imbalance. Eventually we will have to make our own stuff again... its a mathematical certainty, the only question is when.

As for Duffy and other white collar criminals... I know it SEEMS like a waste, but its pretty important to go after them, to try to keep corruption and white collar crime in check.

[Michael Hardner]

What most people think of is "globalism" is the massive flow of goods from east to west with only bits of paper and electronic money going in the other direction.

While I don't consider myself knowledgeable about economics, I'm trying to follow it more. As such, when I see something that strikes me as odd I call it out. Are you saying that globalism is simply the west buying things form the east ? So, for example, there is no profit at all for Canadian, American and other western entities ?

[Argus]

Its not... in a micro level. For you as an individual saving is good... But on a macro level its really bad because it starves the economy of money.

This depends on what you save. If you put it into savings bonds, then I suppose you could be right. If you invest it in stocks in Canadian companies that's something completely different.

My neighbour goes down south every single winter. Does that help the economy? Not really.

[msj]

Unclear how? Encouraging people to save in a stagnate economy only further hinders growth. It's pretty simple to understand.

But Canadians have had a low to negative savings rate for decades now.

The stagnant economy is stagnant for reasons other than people choosing to spend for today and not save for tomorrow which is exactly how the typical Canadian lives.

So, no, it is not simple to understand since it flies in the face of facts.

[ProudCanadianConservative]

Unclear how? Encouraging people to save in a stagnate economy only further hinders growth. It's pretty simple to understand.

People spending beyond their means is worse for the Canadian economy than saving during stagnation.

Spending is the not the only thing that drives the economy it's also production

[dre]

This depends on what you save. If you put it into savings bonds, then I suppose you could be right. If you invest it in stocks in Canadian companies that's something completely different.

My neighbour goes down south every single winter. Does that help the economy? Not really.

Investing the money in stocks wont necessarily help the economy. Firms are pressured to maximize shareholder dividends, and they will only expand operations if theres increasing demand for their products and services. If there ISNT they might use that money to cut costs, reduce their workforce, or even move operations off-shore.

[msj]

If one wants to get to the heart of our alleged "stagnant" economy I think one needs to look at things such as commodity prices (not just oil) falling, and a CDN dollar that has just recently priced this in so manufacturing still has not grabbed and run with the baton passed to it from the declining commodity sector.

So we stagnate as one sector or the other (or both) hopefully improve.

In the meantime, lets look at a huge factor in Canada's "stagnating" economy: debt/housing.

See this story with respect to millions of Canadian households having a negative savings rate that averages out to about -13%.

[i would like to know how anyone thinks it's a good idea to buy a house, presumably because it is an "investment," while increasing their debt at 13% each year. Seriously, do they expect house prices to increase by 15% each year? The logic is nonsensical.]

Of course, most of those people are only buying homes thanks to the bank of Mom and Dad.

So, we have kids, using high leverage, to enter into bidding wars over houses in the Vancouver area and GTA.

They still take on big mortgages, mom and dad provide the seed money instead of spending it or paying off their own mortgage, and the FIRE industry make out like bandits.

Meanwhile, there is nothing productive about the real estate agent, lawyer, property transfer tax clerk, mortgage broker etc... The Finance/Insurance/Real Estate industry is about as productive as opening up a hamburger stand at the local beach (and even then, the hamburger stand at least makes something fulfilling while providing a useful service).

So, there you have it, trillions in mortgages held by Canadians in an ever increasing spiral of debt. Throw in HELOC's and credit card debt and it is no wonder that, on average, the private sector is the most heavily indebted it has every been (individuals, not businesses).

If interest rates go up even modestly (1 to 2% points) then we will get to see the further stagnating economy as millions try to pay for higher debt servicing costs.

While some may look back to various budgets that allowed for things such as 0% down and 40 year amortization periods as being a contributor, among many other boneheaded policies, the reality is Canadians are doing this to themselves.

Thinking that shelter, which is a commodity, is really an investment. Then overpaying for it because debt is so "cheap."

There will be a reckoning and some people will learn from it. Or, we will stagnate along for decades to come.

But I doubt the stagnation has anything to do with Canadians saving money in TFSA's or even RRSP's.

[cybercoma]

People spending beyond their means is worse for the Canadian economy than saving during stagnation.

Spending is the not the only thing that drives the economy it's also production

So produce a bunch of stuff for consumers who aren't buying? Doesn't happen.